New York Governor cracking down on short-term rentals

Travel News 25 Oct 2016

According to an article by The Financial Times, New York governor Andrew Cuomo, is cracking down on short-term rentals like Airbnb, HomeAway, Flip Key etc. Short-term constitutes a stay of less than 30 days and it has been declared that the rule since 2010.

The law bans short-term rentals in apartment buildings, which are core to Airbnb’s business in New York City. Despite this, the city has grown into Airbnb’s third-largest market.

For Airbnb, which offers accommodation rentals in people’s homes, fixing its regulatory problems is a priority. The company has already struck tax deals with more than 200 cities and counties, with agreements that span from Washington state to Amsterdam, and remitted more than $110m in taxes.

“Airbnb is the only accommodation company that is in a strategic way going around cutting tax remittance deals with different jurisdictions to pay the tax directly,” says Rob Stephens, general manager of Avalara MyLodge Tax, which provides tax and compliance services for accommodation hosts who rent through sites like Airbnb and HomeAway.

However in the past few months, Airbnb has started to toughen its position when regulatory decisions fail to go its way. In New York, the company has said it will sue the state if the accommodation bill is signed into law, setting the stage for a long and bitter legal battle.

This is no idle threat. Airbnb has filed similar lawsuits in San Francisco and Santa Monica, which are under way, and in Anaheim, where it has been successful. However, as Airbnb’s negotiations with cities around the world pick up pace, the company knows that, even in cities where it has been severely restricted, enforcement can be a problem when its business remains in high demand.

In Berlin, which in May banned hosts from renting more than half of their homes, more than 87,000 rooms booked in August were still booked through Airbnb, down just 6 per cent from the year before, according to data from AirDNA, an analytics tool for hosts that is not affiliated with Airbnb. While in Barcelona, which has a de facto ban on short-term accommodation, bookings jumped 39 per cent from the previous year, to reach 169,000 bookings in August, according to AirDNA.

These numbers point to the heart of the dilemma for a city like New York, which has grown into Airbnb’s third-largest market despite the fact that short-term apartment rentals have been illegal since 2010.

Enforcement is extremely difficult because the city does not know who the Airbnb hosts are. Other than posing as guests themselves — which is difficult because of the ID verification requirements — enforcers have few options without Airbnb’s co-operation.

So far, nothing has really stopped Airbnb from continuing to show listings, despite concerns in some cases about their legality. How would it affect companies whose travellers book Airbnb? The ‘Business Travel Ready’ program for hosts was launched late last year to curate listing that are catered for business travellers. These listings have essential business travel amenities such as WiFi, 24-hour check-in and smoke and carbon monoxide detectors. Business travellers using Airbnb have booked stays in 172 countries and companies using Airbnb for Business represent 150 countries. To date, about 50,000 companies have used Airbnb for Business and 10 percent of all travel booked through Airbnb is business travel. Travel managers should always keep abreast of such news if your company endorses the use of Airbnb and apply duty of care where necessary.