The popular vacation rental service Airbnb is starting to clash with regulators in New York City, where one host paid a $2,400 fine after the city found that he was violating the state’s "illegal hotels law" by renting his room out using the site.
Today, the startup announced it will support the host, Nigel Warren, through a potentially lengthy appeals process.
The illegal hotels law was written in order to stop large operators like Smart Apartments from using residential buildings as short-term rentals in order to get around hotel taxes and safety laws. The law means that about half the listings — the offers for entire apartments, as opposed to just rooms within an apartment — are illegal in New York state.
There is an exemption in the law if the occupant is present during the guest's stay — if the guest rents just one room, for example. Warren’s roommate was home when his guests were renting, so he and Airbnb are arguing that the exemption should apply.
"This ruling was absolutely wrong on the law."
"This ruling was absolutely wrong on the law, and bad for New York," global head of public policy David Hantman wrote in a blog post today. Airbnb hired the prestigious law firm Gibson Dunn and plans to take the case first to the city’s Environmental Control Board. and then through the court system.
Airbnb has never proactively gotten involved in an individual case before. The company did not intervene until late in Warren’s case, when it filed a brief on his behalf more than six months after the infraction. The company was hesitant for many reasons. First, Airbnb maintains that it’s the responsibility of its hosts to understand whether renting on Airbnb is legal in their jurisdictions. With more than 35,000 cities on the site, it would be impractical for Airbnb to parse all the local laws. Airbnb has also pledged to take on any new costs that occur as a result of the appeal, which could get expensive if applied every time a host got in trouble.
This case, however, is about a broad situation in one of Airbnb’s most important markets, where it is projected to do $1 billion in bookings this year. It doesn’t mean that Airbnb will engage every time a host gets in trouble, the way fellow sharing-economy startup Uber has promised to do on behalf of its livery drivers.
"We know that by stepping up and fighting for Nigel and our community, we have made ourselves a target and will now face attacks in the press and from people who do not understand who our community really is," Hantman wrote. "But the amazing activity that is happening in New York and other cities around the world is worth fighting for."
This case is just the beginning of Airbnb’s public policy fight
Airbnb consulted with Warren to make sure he and his landlord, in whose name the fine was actually issued, would consent to taking the case all the way. "I'm glad to be a part of it because it brought awareness to this issue," said Warren, who already paid the $2,400 penalty for renting his apartment to a guest for three nights and $315. "I also hope that they can get it overturned so that it's not a risk for people using Airbnb."
Still, this case is just the beginning of Airbnb’s public policy fight. Thousands of listings on the site are explicitly illegal under New York state law, and Airbnb is also under intense legal scrutiny in its hometown of San Francisco. Warren’s case concerns only "shared space" rentals, where the occupant is home, which Airbnb argues is already legal in New York. But it’s clear that Airbnb’s interests are much broader. The company will be pushing to change laws around the country in its favor starting this year.