By Adrianne Jeffries and Russell Brandom
Paul DiCesare has hosted more than 100 Airbnb guests over the past three years and even started a service that helps other hosts manage their listings. He was happy to talk to The Verge about Airbnb’s new ad campaign — "It’s kind of cheesy" — and a raucous town hall meeting with users in May — "It was awful" — but when asked to see the listing for the Dumbo apartment he shares with his wife, he suddenly got shy. "With all the heat right now with Airbnb, we want to be as discreet as possible," he says.
Airbnb has made a huge splash in New York — 416,000 visitors a year, according to the company — but it’s now facing a big backlash. Some estimate that as many as two-thirds of the hosts in New York are violating state housing law, a number that spurred an extended battle with state Attorney General Eric Schneiderman that threatens to halt growth in the company’s most lucrative markets.
Airbnb is fighting similar battles with regulators all over the country. What happens in New York will have ripple effects in San Francisco, New Orleans, Malibu, and anywhere regulators are cracking down — which is why Airbnb is cranking up the charm.
The charm offensive
Airbnb is just one of many startups that have had trouble fitting into New York’s heavily regulated service sector. Just last week, Schneiderman and the city’s Taxi and Limousine Commission shut down San Francisco-based Lyft, a startup that lets anyone with a car drive people around for fares.
"The key is to ship the product and have a lot of users addicted to the product."
There is an institutional resistance to change, investor Keith Rabois told Bloomberg News when he described Lyft’s strategy for breaking into New York. "The key is to ship the product and have a lot of users addicted to the product," he said. "If there’s massive adoption and massive popularity and people are in love with your service, that’s going to be the end."
That’s what Airbnb is going for: get on the people's good side, and the politicians will fall in line.
To that end, Airbnb sponsored the New York City Marathon and plastered ads all over the subway. Its message has been particularly visible for state lawmakers, with ads taking over political sites like Talking Points Memo, Capital New York, and the Albany-focused City & State. "We've found that the more you know us, the more you love us and we're working to educate more people about our community," says Airbnb spokesperson Nick Papas. "Our hope is that more New Yorkers will learn about how Airbnb makes the city a better place to live, work, and visit."
In one television spot, a woman named Carol who lost her job and her husband talk about how she uses Airbnb to make a living wage. The spot ends with her making pancakes for her guests. "It’s clear from watching this just how important Airbnb can be in a city where people sometimes struggle to sustain a comfortable lifestyle," Airbnb says on a website devoted to New York City advocacy. "Say you stand with Carol and other Airbnb hosts who want to be able to rent out their homes."
The end game
Airbnb has two major legislative goals in New York. First, it wants to amend a 2010 state law that prohibits New York City residents from renting out their entire apartments for less than 29 days. Second, it wants to figure out how to pay taxes. New York City hotel rooms are subject to a 14.75 percent occupancy tax, which is paid by the guest and collected by the hotel. Airbnb wants to be able to collect those taxes on behalf of its hosts and pay them in bulk.
Neither fight has gone well for Airbnb so far. State lawmakers have been resistant, especially with landlords and hotel owners reluctant to change the rules to make life easier for potential competition.
Airbnb says it wants to start paying taxes
State Senator Liz Kreuger, the company’s most prominent opponent in Albany, says many Airbnb hosts are violating the law, their leases, and the rights of their neighbors, while driving up the cost of housing as landlords convert properties from residential apartments to dedicated Airbnb rentals.
The new ads typically portray an older New Yorker renting out an extra bedroom to make ends meet, something Kreuger says is misleading. "They're marketing this imaginary world," she says. "The majority is people who are renting out their full apartments without their living there" and "renting groups of apartments, taking them out of regular market use."
Airbnb says 90 percent of hosts in New York City are renting out their primary residence, but that 10 percent minority brings in a lot of cash. Travel research firm Skift estimates that nearly half of Airbnb’s business in New York comes from people with multiple listings — not people like Nan and Carol, the "regular folk" in Airbnb’s ads who are just trying to scrape by. Skift calls the phenomenon "the professionalization of Airbnb hosts."
Airbnb was subpoenaed by the attorney general in April based on Skift's data. The company agreed to hand over user data and display a one-page legal warning to every host before they post a listing. "Before deciding to become an Airbnb host in New York, it's important for you to understand the laws that may apply to you," the warning says, before outlining the various ways in which a host might violate tax law, rent regulations, zoning codes, or business-licensing regulations. "We recommend you consult a local lawyer or tax professional."
The new warning may or may not have scared new users away, but the whole affair has made Airbnb's legal troubles very public. The attorney general’s office is keeping quiet on how it will proceed, but its investigation will probably lead to a rash of warning letters to small-time hosts and possible prosecutions for the most egregious violators (although Airbnb says it has already purged about 2,000 bad actors on its own). Either way, Airbnb may be in for some more bad headlines.
Getting to know Airbnb
On Sunday afternoon, a woman with a clipboard approached a group of 30-somethings sitting at an outdoor table in Brooklyn Bridge Park. She asked if they'd like to sign a petition supporting Airbnb in New York. The group politely declined.
What's the problem with Airbnb, one woman wondered after the canvasser walked away. Is it illegal?
I heard they were having problems with people hosting sex parties, one answered, a reference to one of Airbnb’s more embarrassing scandals.
Airbnb is really hoping to replace people’s vague negative impressions with the friendly faces of hosts like Nan and Carol. And since the state legislature won’t meet again until January, the company has six months to concentrate on public relations.
Airbnb has six months to work on its image before the legislature meets again
Airbnb says it brought the city $632 million worth of economic activity over one year, much of which happens in neighborhoods tourists don’t normally visit.
Paul DiCesare says he buys that line wholeheartedly. "It is absolutely pumping money into local areas that normally would never see a dime of tourist money," he says. "I hope these legislators figure out this is the 21st century, and are able to help the consumer and not just the hotel lobbies and all the other bureaucrats that are plugged into that whole process."
And, he says, "I want them to win so that it can legitimize the process so I don’t have to feel shady."