San Fran­cisco law­suit, NYC law high­light global risks for Airbnb

Airbnb faces reck­on­ing

Kuwait Times - - TECHNOLOGY -

SAN FRAN­CISCO/BERLIN: Airbnb, the on­line lodg­ing ser­vice that in­vestors now be­lieve is worth $30 bil­lion, faces a reck­on­ing.

In eight years of tor­rid growth, the com­pany has of­ten clashed with lo­cal pub­lic of­fi­cials seek­ing to min­i­mize the im­pact of short-term rentals on neigh­bor­hoods and ur­ban hous­ing mar­kets. Now, those sim­mer­ing ten­sions are start­ing to boil.

The New York state leg­is­la­ture has passed reg­u­la­tions that Airbnb says could se­ri­ously dam­age its busi­ness in New York City, the com­pany’s largest US mar­ket; Gov­er­nor An­drew Cuomo has un­til Oct. 29 to de­cide whether it will be­come law. The Ger­man cap­i­tal of Berlin re­cently passed a law ban­ning most short-term rentals, and Barcelona and Amsterdam are im­pos­ing steep fines for list­ings that vi­o­late laws there.

Ground zero for Airbnb’s fight against tight­en­ing reg­u­la­tions is its home of San Fran­cisco, where the com­pany has sued to block a new re­quire­ment that it re­ject book­ing fees from prop­erty own­ers who have not reg­is­tered with the city.

The case is a cru­cial test of Airbnb’s busi­ness model. The com­pany ar­gues it can­not legally be held re­spon­si­ble for how landlords use its plat­form. If it is re­quired to en­force lo­cal laws on short­term rentals, that could dras­ti­cally re­duce list­ings - and rev­enue - in some of its big­gest mar­kets.

Other cities look­ing to rein in Airbnb are watch­ing the pro­ceed­ings and look­ing to the city’s law as a po­ten­tial model, said James Emery, deputy city at­tor­ney of San Fran­cisco. “Through­out the coun­try, peo­ple rep­re­sent­ing cities have called me to ask what’s go­ing on with the lit­i­ga­tion,” he said.

Airbnb’s le­gal ar­gu­ment re­lies on a 20-year-old statute de­signed to pro­tect free speech on­line, known as Sec­tion 230 of the Com­mu­ni­ca­tions De­cency Act. The com­pany as­serts in its law­suit that San Fran­cisco “im­per­mis­si­bly treats Airbnb as the pub­lisher or speaker of third-party con­tent” when it is merely a plat­form for com­mu­ni­ca­tions be­tween prop­erty own­ers and guests.

Other on­line mar­ket­places - such as Ama­zon, eBay , and Craigslist - have cited the same law to shield them­selves from li­a­bil­ity for any im­proper trans­ac­tions among users of their ser­vices.

In the San Fran­cisco case, US District Judge James Donato said at an Oct. 6 hear­ing he wasn’t “see­ing the link” be­tween free speech pro­tec­tions and San Fran­cisco’s short-term rental reg­u­la­tions. Donato is ex­pected to is­sue a rul­ing soon. Airbnb has also sued the South­ern Cal­i­for­nia city of Ana­heim, home to the Dis­ney­land theme park, and the nearby beach city of Santa Mon­ica, over reg­u­la­tions that the com­pany con­tends are il­le­gal.

‘Il­le­gal’ busi­ness model

Airbnb takes a cut of the rev­enue when a room or a home is booked and charges a ser­vice fee to guests. The com­pany says it helps com­mu­ni­ties by en­abling mid­dle-class fam­i­lies to make ex­tra money. It also points to agree­ments with of­fi­cials in nearly 200 lo­cales around the world, mostly for tax col­lec­tion and in some cases for broader short-term rental reg­u­la­tion.

Crit­ics counter that, in pop­u­lar tourist des­ti­na­tions, Airbnb takes af­ford­able hous­ing off the mar­ket, drives up home prices and dis­rupts neigh­bor­hoods with streams of tran­sient vis­i­tors.

As reg­u­la­tory threats loom, Airbnb on Wed­nes­day an­nounced it would cre­ate an on­line reg­is­tra­tion sys­tem for prop­erty own­ers and au­to­mate the en­force­ment of Airbnb’s ex­ist­ing rules in New York and San Fran­cisco, which limit op­er­a­tors to a sin­gle list­ing of an en­tire res­i­dence.

New York Assem­bly­woman Linda Rosen­thal, spon­sor of the New York leg­is­la­tion, was unim­pressed by Airbnb’s an­nounce­ment. “It’s pre­pos­ter­ous. Maybe half their list­ings are il­le­gal” in New York City, she said. “It’s part-and-par­cel of the busi­ness model.” Ex­ist­ing New York state law bars most ur­ban apart­ment-dwellers from rent­ing out their units for less than 30 days if they are not present.

The law re­cently passed by the state leg­is­la­ture would bar even ad­ver­tis­ing a rental that vi­o­lates that ex­ist­ing law, which could help reg­u­la­tors crack down on Airbnb it­self in ad­di­tion to the users of its ser­vice.

Airbnb has said it will sue New York state if the gov­er­nor en­acts the law. The com­pany said it has taken down nearly 3,000 il­le­gal list­ings in New York City over the past year, and re­ports 44,622 to­tal list­ings in the city as of Sept. 1.

Bat­tle in Berlin

In Berlin, Airbnb is fight­ing a city de­mand that it turn over in­for­ma­tion to help en­force a new law im­pos­ing fines of up $110,000 on peo­ple rent­ing out more than 50 per­cent of their homes for less than two months - among the strictest reg­u­la­tions world­wide.

Airbnb is “con­fi­dent it would find a fa­vor­able agree­ment” with the city,” said Peter Hunt­ing­ford, Airbnb head of pub­lic af­fairs for Europe. But with the city in­tent on col­lect­ing data and Airbnb in­tent on re­fus­ing, another le­gal bat­tle looms. “If Airbnb in­tends to risk a trial, we are pre­pared to walk down that path,” said Martin Pall­gen, a Berlin Se­nate spokesman.

In Barcelona, Airbnb’s third-largest mar­ket in Europe, the city is im­pos­ing fines that ex­ceed $65,000 for list­ings with­out proper li­censes. Amsterdam city of­fi­cials in April started scrap­ing data from Airbnb and other short-term rental web­sites to root out il­le­gal hosts be­cause Airbnb will not turn over de­tails on vi­o­la­tors.

In its Wed­nes­day an­nounce­ment, Airbnb put for­ward what the com­pany’s head of global pol­icy and pub­lic af­fairs, Chris Le­hane, called a “com­pre­hen­sive reg­u­la­tory strat­egy” tar­geted at “root­ing out bad ac­tors.”

But the new pro­pos­als stopped short of any com­mit­ments to share in­for­ma­tion or en­force bans on short­term rental op­er­a­tors, which many cities say is cru­cial for ef­fec­tive reg­u­la­tion.

Ris­ing risks

Crit­ics con­tend that a large por­tion of Airbnb list­ings are of­fered by com­mer­cial op­er­a­tors with mul­ti­ple prop­er­ties who are es­sen­tially run­ning il­le­gal ho­tels. The com­pany, they ar­gue, has ef­fec­tively turned many res­i­den­tial neigh­bor­hoods into tourist zones.

In Los An­ge­les, a study by the pro­la­bor Los An­ge­les Al­liance for a New Econ­omy found that prop­erty own­ers with two or more list­ings gen­er­ated 44 per­cent of all Airbnb rev­enue in Los An­ge­les. Airbnb, in a state­ment, dis­puted that con­clu­sion and called the group’s anal­y­sis “mis­lead­ing.”

In New York City, the state At­tor­ney Gen­eral found that, be­tween 2010 and 2014, more than 300,000 Airbnb reser­va­tions vi­o­lated the law, rep­re­sent­ing about $304 mil­lion in book­ing rev­enue, with about $40 mil­lion of that go­ing to Airbnb. Pub­lic of­fi­cials need to pri­or­i­tize the rights of full-time res­i­dents over landlords and vis­i­tors, said Rosen­thal, the New York Assem­bly­woman.

“I rep­re­sent New York­ers,” she said. “I don’t rep­re­sent tourists, and my re­spon­si­bil­ity is not to pro­tect their cheap deal at the ex­pense of New York­ers.”—Reuters


Airbnb’s logo, a peer-to-peer on­line mar­ket­place and home­s­tay net­work that en­ables peo­ple to list or rent short-term lodg­ing in res­i­den­tial prop­er­ties.

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