Airbnb — Too Entrenched to Fail
Recently, officials swarmed a New York City apartment building in order to crack down on illegal short-term rentals. According to the Wall Street Journal, 27 notices of violations were issued, making this raid the most significant enforcement of New York City’s regulations and restrictions on short-term rentals. While this recent raid is noteworthy, it is unlikely to affect Airbnb’s presence in New York City.
For reference, the current law in New York City states that it is illegal to rent or advertise short-term rentals unless the host is present during the duration of the stay. Furthermore, there is a maximum of two guests per location. This regulation is in place to alleviate the housing crisis by attempting to prevent people from owning multiple properties for the sake of renting them out.
These laws were put in place in 2016. However, they have not significantly affected Airbnb’s business in New York City. In an article published by Quartz, it was disclosed that the Office of Special Enforcement completed approximately 3,400 inspections of short-term rentals. The number of inspections that resulted in an issuance of a violation is unknown. One would expect that the high number of investigations paired with regulatory oversight, would have an adverse effect on Airbnb.
According to Inside Airbnb, a third-party Airbnb database, there are currently 46,542 active Airbnb listings in New York City. In July of 2017, there were 30,152 active listings. This material increase in listings indicates that the rules and regulations had little effect on Airbnb. Despite the regulations and risk of inspection, people are continuing to list more and more properties on Airbnb.
Airbnb’s revenue from New York City listings confirms the negligible impact of the rules and regulations in place. Revenue still followed a predictable upward trend after the implementation of regulations in 2016. To be fair, revenue growth did fall from 35% to 20% after the regulations were implemented. While the regulations may have affected Airbnb at the margin, there were no adverse consequences or repercussions to the company as a whole.
Because the laws regarding short-term rentals have not changed materially, the worry of legal issues threatening Airbnb’s position in New York City seems to be unfounded. While inspections have found illegal short-term rentals, this has been happening for years without damaging Airbnb’s growth in New York City.
