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HOUSE PROUD: A room in the home of New York City resident Tama Robertson. She rents it out to visitors using Airbnb.
Hiroko Masuike/The New York Times/Redux
HOUSE PROUD: A room in the home of New York City resident Tama Robertson. She rents it out to visitors using Airbnb.

A room of one's own

Travel | New York goes after Airbnb hosts in a first test of what rules will govern the new sharing economy

Issue: "2013 Daniel of the Year," Dec. 14, 2013

Misty is a singer who lives in Spanish Harlem with a roommate. She sporadically travels from the city for gigs. The cost of rent in New York City is such that leaving an apartment empty, to her, seems “almost a crime,” and renting out her room for the few nights when she’s away is one way she makes ends meet. She uses the newly popular short-term rental website Airbnb to advertise her place, and has had half a dozen bookings over the last year. 

“It’s been a third job for me—I don’t know what I would have done,” said Misty, sitting on a park bench as the two children she watches in her second job as a nanny had lunch.

Airbnb is a cleanly designed website where users can rent rooms by the night in their own homes, providing a secure experience for both guests and hosts. Reviews of both guests and hosts, and measures like withholding payment to hosts for 24 hours after the visit begins, help keep everyone accountable and satisfied. The site is popular worldwide. Since the San Francisco–based company’s launch in 2008, the site has expanded to half a million homes in 192 countries. In New York City, the site started in 2009 with 30 hosts; now it has about 15,000 hosts. According to the company, the city had 416,000 Airbnb guests in the last year and generated $632 million in economic activity. 

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The hotel industry is not pleased with Airbnb’s success, and neither are local governments that stand to lose millions in hotel taxes. Misty’s last name is withheld because New York Attorney General Eric Schneiderman may target with fines and prosecution the tens of thousands of hosts who have used Airbnb in the state. 

Schneiderman has subpoenaed Airbnb for extensive personal records of all of the hosts who have offered their apartments for rent in the last three years. The subpoena requests hosts’ names, addresses, guest history, revenue, and tax documents, but also bank account information to verify whether hosts are using ghost accounts. In New York the legality of these types of short-term rentals is iffy. Rules vary by jurisdiction across the country, partly because Airbnb is a new business concept.  

Though the state isn’t going after Airbnb itself, Airbnb is fighting the subpoena in court and asking the state legislature to clarify the law. In October the company filed a motion in the state Supreme Court to quash the subpoena. “No matter how benevolent their intent, officials in the United States are not empowered to comb through any and all non-public records to root out perceived or suspected wrongdoing,” Airbnb’s lawyers wrote. A coalition of tech companies—including Facebook, Google, and Amazon—have filed in support of Airbnb. 

Paul Avelar, an attorney with the libertarian law firm Institute for Justice, said the hotel industry is using a common tactic of existing companies that want to smother incoming competition. Economists call it “regulatory capture.” Avelar said, “They use the power of the government to prevent lower cost competition from entering the marketplace.” The attorney general’s office did not respond to a request for comment. 

In post-recession America, individuals who live on tighter budgets are making it more common to share possessions like houses and cars. Airbnb, potentially a multibillion-dollar company if it goes public, is the behemoth of the emerging “sharing economy.” A sharing cousin is Lyft, where members pay to share car rides in their neighborhood. At their best, these companies are filling economic inefficiencies: A singer who leaves an empty apartment on a weekend in New York can find someone who needs a room to foot the bill. But individual hosts are a new category of business, and local governments aren’t sure how to regulate them. New York is a test of freedom in the sharing economy. 

The Airbnb sharing economy has something hotels don’t; because transactions are based on sharing, they are more relational. Airbnb hosts, in striving for good guest reviews, will take hospitality beyond fresh sheets and a continental breakfast. One weekend this fall, I traveled up to the Catskills with three friends; we booked a middle-of-nowhere cabin on Airbnb. Our host chopped wood for the campfire and wrote out lengthy details about hikes and fishing spots nearby. When the temperature dropped that night and we couldn’t figure out how to light the gas heater, my friend texted him and he quickly wrote back, walking us through step by step. He told us to visit a farm stand down the road, which turned out to be a gem packed with fresh donuts, squash, and apples.

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