Airbnb In Focus Part 2 Of 2

Why CBS Should Be Ashamed Of Their AirBNB Report

Despite some media outlet’s praise ofAirBNB with their legally questionable history, Governments both in the United States and across the Atlantic have begun to see the practice of using residential units for transit purposes as being a profound problem in their region. In New York City for example, where skyrocketing rents and illegal hotel operators such as Hotel Toshi/Smart Apartments have only contributed to an already massive housing crunch. Since so many of these buildings which house these illegal operations are or were rent regulated buildings before being taken off the market, New York City’s homeless problem has continued to boom, there are currently 50,135 homeless New Yorkers which reside throughout the five boroughs, according to shelter records; the most since the Great Depression. .

And how does AirBNB separate themselves from problems such as these? For starters they leave the legal ramifications of operating in places like New York and San Francisco up to the vendors, not taking any actual responsible onto themselves. Second when it comes to dealing with Governments which are wary of AirBNB’s business practices, company heads see these problems as simply a business design problem. As Danielle Kucera of noted in an article released on January 15th of this year, ‘“We’re navigating a world of very uncertain and fragmented laws in many cities,” Chesky said. “ We have to think broadly and very differently and holistically about government relations. It’s not just about meeting with government officials. It’s about solving a design problem — if we have problems in governments, that’s a design problem we need to solve.”’ But their legal status in New York goes far beyond this so called legal status since the state Multiple Dwelling law clearly states that rentals in residential apartments for less than 30 days are illegal and prime targets for OSE (Office Of Special Enforcement), the agency designated to crack down on these operations. B&B’s are allowed (and people are allowed to rent out rooms in their apartments or houses) but the proprieters must live on premises. There is no way for Chesky & Co to confirm their hundreds of listings are legitimate operations.

New York City’s local legislature has certainly no shortage of cases dealing with illegal hotels nor does its judicial system., in fact, reporter Kaitlin Ugolik wrote on the latest defeat suffered by Smart Apartments who were looking to advertise their units on billboards throughout the city. Justice Arthur F. Engoron sided with the city which filed an injunction to stop the company’s attempt to use public space to advertise their business, stating that using these apartments meant for residential purposes as hotels is a nuisance and poses a real danger for the visitors and long term tenants. According to Ugolik, Justice Engoron was quoted as saying “Whether or not, in our cynical age, most people would consider engaging in illegal activity as a plus, minus or neutral, they have a right to know whether it is or is not [illegal]…” and “As plaintiff notes ... courts and commissions have held that a merchant impliedly represents that its products and services are legal and safe, and if they are not, the merchant has engaged in a deceptive practice.” He would go to note that none of these operations equipped with the safety measures as actual hotels which have sprinkler systems and a diagram of all fire exits and secondary egress.

This decision was the end result of a lawsuit filed by New York city against Toshi Hotel / Smart Apartments as their businesses have become more visible and have been bringing in tourists in record numbers. Both operations claim they were unfairly targeted since there has yet to be a lawsuit filed against AirBNB but they failed to prove their case in the trial.

New York is certainly not the only city in the US dealing with AirBNB. Jose Cisneros, the Treasurer of San Francisco, the company’s own home town, has announced that AirBNB will no longer be exempt from paying hotel tax. The rate of those taxes are 14.5-15% per booked unit. Treasury spokesman Greg Kato said that their city was not creating new rules only enforcing old ones, according the Huffington Post. . AirBNB’s spokesperson responded that new and innovated technological operations should not be “stifled” by 40 year old laws. "Innovative new models that allow San Franciscans to generate additional income should be addressed by innovative laws and policies--not stifled by 40-year-old regulations," the spokesperson stated. Local Democrat, Aaron Peskin countered their argument, "The message that AirBNB was sending was that tourists don't need to pay their fair share…”

The Government of the Netherlands also sees the problem of AirBNB as far more than just a legal “design problem”, especially in Amsterdam where there is a full crack down on illegal hotels and similar practices. . According to the in an article entitled “AirBNB could be banned in Amsterdam: Local authorities are now hunting for illegal hotels” Dutch officials have been engaged in an illegal hotels crack down since November 12, including those under the banner of AirBNB. Leading the charge is Alderman Freek Ossel who has seen the investigations into as many as 200 homes of interest. Those operations which were uncovered were immediately closed down and unsuspecting tourists were left out in the cold. Reportedly this crackdown will only escalate in the coming weeks as civil servants will ramp up their hunt of an estimated 2000 homes which operate lesser known illegal hotels. However AirBNB is said to run out of 4191 locations throughout the Amsterdam, making it one of the most popular sites in Europe. Fire hazards will also be sought out by this crack down.

There is another reason for this crackdown to go along with safety concerns, those who run illegal hotels don’t pay local hotel taxes and according to the authors of article, “The government believes AirBNB doesn’t comply with local legislation (VAT and tourist tax). Conversely, AirBNB calls itself a marketplace, and states that its users are responsible for complying with the local legislation.” And this exploding situation has forced Dutch authorities to define what it means to be an illegal hotel in their country and what they have come up with is as follows, ‘“an apartment or house without an official hotel permit that can be rented by tourists in return for money” [translation:TNW]. Legal exceptions appear to be renters with a short stay permit or official bed and breakfast businesses.”’ In short, by definition should be considered AirBNB, at the time of this article’s release has been deemed illegal but there is one huge caveat here. The author of the article noted that after his article was released, Amsterdam city spokesman Jan-Jaap Eikelboom posted a reply to this piece on the city’s facebook page that AirBNB has not been deemed illegal and top officials are actually working with the company to comply with local laws.

So while many media outlets find it appropriate to fawn over the questionable practices of AirBNB and their many cousins of the same ilk, public officials finally seem to be taking notice of their effects on local residents, mostly rent regulated tenants and on the ever increasing amount of revenue siphoned out of their respective cities. There is also more than a little notice being made towards the decline in the quality of life for those who live in the buildings where these operations are housed. So it seems curious for any one from CBS to describe AirBNB’s practices as “cool”.


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