Airbnb Creates Regulatory Framework To Assuage Cities’ Concerns

As recent headlines suggest, the home-sharing behemoth is taking a new approach to combating the slew of regulatory concerns posed by local governments all over the world regarding the way it does business.

Airbnb has had a target on its back since its inception eight years ago, and has been criticized by both municipalities and hoteliers around the globe for its lack of accountability and transparency regarding hosts, eating away at taxable income and inflating rents in already tight housing markets.

Until recently, Airbnb’s method of choice when faced with a combative city was seeking legal action, but as of late, the unicorn has switched gears, making deals with local governments and assuaging their concerns instead.

“At the end of the day we recognize that we need to be partners with cities and work with cities,” Airbnb head of global policy Chris Lehane said during a conference call Monday. “The last couple of weeks have been pivotal moments for us.” 

Negotiations And Settlements

The company’s latest move to iron out issues with city officials, most notably in San Francisco and New York City, was as much an effort to salvage its reputation and not hinder profits as it was a “need to be [a] partner with cities,” as Chris stated.

“I think it’s fair to say they have had a change of heart about the way they’re approaching regulations in their particular segment of housing,” Daniel Marre, Perkins Coie's co-chair of the Hotels & Leisure Practice tells Bisnow. “I can speculate as much as anyone else, but I think they have probably a view to liquidity in the near to medium future, probably an IPO, so I think they want to reduce uncertainty so they can maintain their market value.”

The company dropped a lawsuit it filed two months ago against New York City challenging a new law that would fine Airbnb up to $7,500 for every illegally listed property on their site. Airbnb will finalize the settlement  Monday as long as NYC agrees to penalize the hosts, and not fine the company. Similarly in S.F. the company was ordered by a judge to further negotiate with the city to resolve a suit combating a new law that would fine Airbnb for every listing not registered with the city.

“In some ways you’ve got to go along to get along,” NY-based Perry Aronin partner William Aronin (above) tells Bisnow. “New York City is one of its biggest in the world. Other cities were very clear they were sitting and waiting to see how New York played out. If they fought to the death and lost in NY they could have been regulated out of existence.”

New Regulations To Set Precedent

Though it has been difficult for Airbnb to streamline its efforts to collectively work with local municipalities around the globe, particularly because policies change from city to city, the company has been making major moves as of late.

In New Orleans, Airbnb agreed to share data with the city, including the names and addresses of its hosts, in exchange for the legalization of short-term rentals, and banned listings in its historic French Quarter; and in London and Amsterdam, the home-sharing giant agreed to limit annual rentals to 60 and 90 days a year per host, respectively.

The company has even gone as far as to release a resource booklet titled Airbnb Policy Tool Chest this week, outlining four ways it’s prepared to work with city officials to support their policy needs, contribute to hotel taxes, and share host data and information needed for cities to enforce rules.

“What appears to be happening to me is that they’re entering into deals jurisdiction by jurisdiction, and they’re trying to create frameworks that other cities can enter into with them,” William says.

“They are touting the New Orleans deal as solid thing that protects well. It bans rentals in historic districts so they’re not taking away from hotel business. It’s interesting that they’ve chosen this version of regulation which actually allows you to carve out neighborhoods [to ban]. This can be an interesting development and a powerful tool for cities to regulate.”

Level Playing Field

Though municipalities, hosts and Airbnb are benefiting from these new regulatory arrangements, experts say hoteliers may not be so easily swayed.

Daniel (above) says operators of commercial buildings spend big bucks adhering to safety regulations that don’t apply to people’s homes when renting an Airbnb unit.

“The issue the hotel industry has with Airbnb is hoteliers are saying, ‘Hey, wait a minute. We have invested in all this infrastructure—all these fire and safety systems required by code, and yet none of the Airbnb owners are required to,’” Daniel tells us. “I think the hotel industry mantra is ‘We’re happy to compete with Airbnb, but we have to compete on a level playing field.’”