Evidence Indicates Nearly Three-Quarters Of NYC Listings Violate The Law

Attorney General And City Of New York Announce Joint Enforcement Initiative Against Illegal Hotels

Schneiderman: This Report Raises Serious Concerns About The Proliferation Of Illegal Hotels And Its Impact On The City Of New York

A report issued last week by Attorney General Eric Schneiderman found widespread illegality across New York City listings on the Airbnb website, with data indicating that as much as 72% of Airbnb reservations over the last several years violated New York law. The report, “Airbnb In The City,” also found commercial enterprises using Airbnb to operate multimillion-dollar businesses; in one instance, a single commercial user made $6.8 million in less than five years. The report is based on data obtained by the Attorney General’s Office as a result of a May 2014 subpoena for information about potential illegal hotels using Airbnb’s site.

Attorney General Schneiderman also announced the formation of a joint enforcement initiative with the City of New York to investigate and shut down illegal hotels in the five boroughs. Together, the Attorney General’s Internet and Taxpayer Protection Bureaus and the City’s Departments of Finance and Buildings along with the Office of Special Enforcement will investigate violations of building and safety codes, tax regulations and the executive law.

“This report raises serious concerns about the proliferation of illegal hotels and the impact of Airbnb and sites like it on the City of New York,” said Attorney General Eric Schneiderman. “We must ensure that, as online marketplaces revolutionize the way we live, laws designed to promote safety and quality-of-life are not forsaken under the pretext of innovation. The joint city and state enforcement initiative is aimed at aggressively tackling this growing problem, protecting the safety of tourists and safeguarding the quality-of-life of neighborhood residents.”

The data-driven report offers the first exploration of how users in New York City, one of Airbnb’s most important markets, utilize the online lodging rental platform. “Airbnb In The City” uses quantitative data to inform an ongoing debate about how best to embrace emerging technologies while protecting the safety and well-being of our citizens.

By analyzing Airbnb bookings for private stays between January 1, 2010 and June 2, 2014, the report offers a never-before-seen snapshot of how Airbnb is used and by whom. Among the key findings are:

• Up to 72% of Airbnb listings are illegal: Of the 35,354 private, short-term listings, data suggest that 25,532 of them violated either New York State’s Multiple Dwelling Law and/or New York City’s Administrative Code (zoning laws). Hosts generated approximately $304 million in revenue from these listings alone and, Airbnb itself earned almost $40 million from these transactions.
• Commercial users run multimillion-dollar businesses: Over 100 users controlled more than 10 different apartments that were rented out regularly through Airbnb. Together, these hosts booked 47,103 reservations and earned $59.4 million in revenue. The most prolific user administered 272 unique listings, booked 3,024 reservations and made $6.8 million in revenue. Additionally, while only 6% of hosts ran large-scale operations on Airbnb, that same group dominated the platform, generating 36% of all rental transactions and collecting 37% of total revenue – or $168 million.
• Numerous units appear to serve as illegal hostels: New York law prohibits commercial enterprises from operating hostels. In 2013, approximately 200 units were booked through Airbnb for more than 365 nights during the year, indicating that multiple, unrelated guests shared the same unit on the same night, as they would in a hostel. The 10 most-rented units were booked for an average of 1,900 nights in 2013, with one top listing average 13 reservations per unit per night.
• Gentrified neighborhoods account for vast majority of Airbnb revenue: Bookings in just three Manhattan neighborhoods – Greenwich Village/SoHo, Chelsea/Hell’s Kitchen and Lower East Side/Chinatown – accounted for more than 40% of hosts’ revenue, or about $187 million. By contrast, all reservations in Queens, the Bronx and Staten Island combined brought in $12 million, less than 3% of the New York City total.
• Short-term rentals are displacing long-term housing options: In 2013, more than 4,600 units were booked for at least three months of the year. Of these, nearly 2,000 were booked for a cumulative total of six months or more, rendering them largely unavailable for use by long-term residents. Notably, the share of host revenue from units booked as short-term rentals for more than half the year increased steadily, accounting for 38% of the site’s revenue by 2013.

A copy of the report is available here.