Hotel Conglomerates and AirBnB: The Tale of lobbyists thwarting a cheap stay in the Big Apple.

by Marvis Barnes January 21 2014, 01:51

Some people refer to it as the City of Dreams. The Big Apple. The Melting Pot. The Capital of the World. Or the City that Never Sleeps. Regardless of the chosen alias or nickname, there is one universal truth about New York, New York.  That is—that it sure isn’t cheap! In fact, some would say that it’s outrageously expensive! So for all the accolades and attractions that have rightfully earned the city its share of global admirers, there exists a rather large barricade for those wishing to experience the city. A former candidate for mayor in New York City ran under the appropriately coined political party known as—“The rent is TOO damn high.”[i]  The average rent for an apartment in NYC? $3,017 a month.[ii] The average cost of purchasing a Manhattan apartment? $1.425 million.[iii] The average cost of a hotel stay in the city? A hair under $300.[iv]

Alas, in recognition of this debilitating characteristic, the entrepreneurial minds of a few Americans created a business that not only allows everyday citizens to earn a buck in order to pay for their rent or mortgage but also enables people to stay cheaply. Airbnb was born in 2008.[v] The company is an online service that provides a platform for individuals referred to as “hosts”, generally private parties, to rent unoccupied living space and other short-term lodging to guests.[vi] As of January 2014, the company had over 500,000 listings in 34,000+ cities and 192 countries.[vii] Listings include private rooms, entire apartments, castles, boats, manors, tree houses, tipis, igloos, private islands and other properties.[viii] This innovate business model and service has been widely utilized and appreciated. Except, in the Capital of the World—New York.

Airbnb effectively became the great disrupter to the profits of the New York Hotel industry. According to a New York business magazine, “about 87% of Airbnb listings outside of the large bunch of hotels in Manhattan.[ix] This means that Airbnb is essentially directing dollars to neighborhoods that don't usually see the spending spoils of the $55 billion-a-year tourism industry.[x] In response, hotel conglomerates have successfully lobbied the enforcement of a 2011 law that makes it illegal for New York residents to rent out a property for less than 29 days.[xi] Though it is clear that the legislative intent behind the laws was aimed at landlords who bought up residential properties and turned them into hotels, hotel chains have been able to fight back by ushering municipalities, such as New York, to apply these laws to those “Hosts” on Airbnb.

A Manhattan man by the name of Nigel Warren rented out his apartment for $100 a night for a few nights as a host on Airbnb. [xii] This rental resulted in him being prosecuted by the city for “unlawfully” renting a room for such a short term as to be in violation of the city’s housing ordinances.[xiii] The result? Fines amounting up to nearly $40,000.[xiv]

From the perspective of a fellow renter or owner of a property in the building, it’s understandable to desire a home that isn’t near a residence that frequents new and unfamiliar persons ever so often. After all, one of the luxuries of a long-term lease or home ownership is the familiarity and communal bond that you gain by having established neighbors. And as evidenced by the legislative intent of such laws, the city does have a rightful interest in ensuring that apartments and homes are not pseudo hotels. Hotels are subjected to increased regulatory, both financially and health wise, requirements.[xv] By all means, let’s stop slumlord hotel chains from seeing the light of the day. I rather enjoy the fact that I can be assured of the relative sound structure and comfort of a hotel and its rooms. Unfortunately, I also pay for those “insurances.”

However, what say you about the purity of the free market theorem? Especially in such a limited context as a short-term rental? If the demand is there ($300 a night for a hotel room ensures that it is!), then I say allow those willing to step forth do so and supply such housing. Allow residents of New York to do what residents in major cities across the globe are doing—briefly rent out their rooms to eager travelers. This by no means a route that breathes life in the existence of slumlord hotel chains. Permitting Airbnb to operate provides residents with the tools of empowerment to actually be able to afford living in the “world’s capital” without constructively giving up their arm and leg to their landlord (you only have two of each after all).

 Airbnb is a sound business model that allows even the struggling college student who might be having trouble paying their rent one month or the married couple who is saving up for a honeymoon trip to become instant entrepreneurs. The host gains a small profit, the guest finds somewhere affordable to stay for a couple days, airbnb creates jobs by hiring people to maintain the service, and guess what? The city of New York wins too!  You New York get a chance to open your pearly white gates of admission to the avid traveler who can finally afford to visit your city. And as every resident of a major city knows, with “annoying tourists” comes money. And that “annoying tourist” money goes to local businesses and the coffers of a great city. Now with such a reciprocally beneficial cycle, why on earth would you want to thwart such a good thing? The advice of the PEOPLE—tune out the hotel lobbyists and allow New York to be the great host that it is and allow Airbnb to flourish.

 

 

 



[i] http://www.huffingtonpost.com/tag/the-rent-is-too-damn-high-party

[ii] http://www.huffingtonpost.com/2013/07/09/new-york-city-rent_n_3568278.html

[iii] Id.

[iv] http://www.nycgo.com/articles/nyc-statistics-page

[v] https://www.airbnb.com/about/about-us

[vi] Id.

[vii] Id.

[viii] Id.

[ix] http://www.crainsnewyork.com/article/20130512/TECHNOLOGY/305129987

[x] Id.

[xi] http://www.npr.org/blogs/thetwo-way/2013/05/21/185787514/airbnb-stays-are-illegal-in-new-york-court-rules

[xii] http://www.nytimes.com/2012/12/01/your-money/a-warning-for-airbnb-hosts-who-may-be-breaking-the-law.html?pagewanted=all&_r=0

[xiii]  Id.

[xiv] Id.

[xv] http://www.health.ny.gov/regulations/public_health_law/section/225/

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