Airbnb Blamed for NYC Housing Crunch, in Study Funded by Hotel Union

Brooklyn listings on Airbnb’s website.
(BARBARA LEONARD / Courthouse News Service)

MANHATTAN (CN) – Commissioned by a union for hotel workers, a report published Tuesday says Airbnb is to blame for soaring rents in New York City and the failure by elected officials to increase affordable housing.

From its launch nearly a decade ago in San Francisco, Airbnb has grown to a dominant force in the international-lodging market.

But a 49-page report published Tuesday by a research group out of McGill University estimates that Airbnb has removed thousands of units from New York City’s long-term rental market, causing an increase in the average long-term rent by 1.4 percent over the last three years. This means average New York City renter will pay $380 more annually, according to the study.

But Airbnb said in reaction to the study that its data paints a different picture: that the average New York City host has lived in one of the five boroughs for 19 years, that 92 percent of them are renting out their primary residences, and that 79 percent of them “say hosting on Airbnb has helped them afford to stay in their homes.”

Long-term rentals are also not as common in New York City as shorter stays, Airbnb said, noting that New York City hosts rent their homes four nights per month on average.

Though published by urban-planning researchers at McGill University, Tuesday’s study was commissioned by a union called Hotel Trades Council.

The paper argues that Airbnb is “almost certainly” trafficking in illegal rentals since New York state’s Multiple Dwelling Law forbids short-term rentals of fewer than 30 days in buildings with three or more units unless the owner is present.

Estimating that 87 percent of entire-home reservations are illegal under New York state law, the report says 66 percent of Airbnb’s revenue, about $435 million, and 45 percent of all New York Airbnb reservations last year were illegal.

Assemblywoman Linda Rosenthal, a Manhattan Democrat, told Politico in reaction to the report that it “proves that Airbnb has been lying all along, trying to convince us that illegal listings are rare as the dodo bird.”

“In fact, a full three-quarters of all of Airbnb revenue is derived from illegal listings that hurt hardworking New Yorkers and drive up their rent,” Rosenthal said in a statement.

The report also blames Airbnb for the growing “ghost-hotel” phenomenon, where the owner of an individual unit or entire apartment building converts these properties into multiple private-room listings, which make up 16 percent of all private room listings in the city.

The report says Airbnb’s 4,700 private-room form 1,200 discrete “ghost hotels,” up 79 percent increase since 2015, outpacing the overall rate of Airbnb growth in New York.

Operators of “ghost hotels” earned $30.4 million on Airbnb last year, according to the study.

The report includes a review by one ghost-hotel guest who called the listing “very misleading.”

“For those who believe every small room is ‘private,’ it’s actually not,” the guest wrote. “On my check in, I was given room keys for room 116, but my room was 115, but my key still worked for room 115. My first day there, I got curious and tried using the keys on room 116 as well, and they actually worked. The door key to every single ‘room’ is the same.”

But Airbnb said it has adopted a one-list-per-host policy to guard against those who use the system as a commercial enterprise by adopting.

“Although inconvenient for this author’s anti-home-sharing bias, Airbnb supports legislation that would restrict home sharing to one single home, which would finally allow enforcement to focus on illegal hotel operators while protecting regular New Yorkers who are trying to make some extra money to live in a city that gets more expensive by the year,” Josh Meltzer, head of Northeast policy at Airbnb, said in a statement.

“The comprehensive legislation being considered in Albany would protect public safety and target bad actors operating illegal hotels, [while] allowing responsible hosts to continue to share their primary home,” Meltzer added.

Echoing the findings of a study last year from Inside Airbnb, the report Tuesday out of McGill focuses on Airbnb’s role in the gentrification of Brooklyn’s predominately black neighborhoods, pointing out racial disparities when it comes to who profits from Airbnb rentals.

According to the report, in all 72 of New York City’s predominantly black neighborhoods, Airbnb hosts are five times more likely to be white.

And those white Airbnb hosts in black neighborhoods earned an estimated $160 million, compared with only $48 million for black hosts — a 530 percent disparity — the report found.

When Inside Airbnb linked the website to gentrification back in March, the company blasted the study’s methodology, saying the figures about the racial makeup of Airbnb hosts were derived from facial-recognition technology.

Harvard Kennedy School professor Robert Livingston is quoted in Airbnb’s response as calling “the practice of determining race from computer software is problematic, controversial, and even offensive to some.”

Airbnb also quoted Laura Murphy, former head of ACLU’s Washington legislative office, as calling it “a classic case of ‘race-bait and switch.’”

“This is all a diversion tactic backed by a lodging industry that is deeply threatened by Airbnb,” Murphy said in March.

Tuesday’s study says the housing losses and neighborhood disruption that black communities face because of Airbnb affect black residents six times more than white residents, as residents in these neighborhoods are 14 percent white and 80 black black.

The study showed 23 percent growth in revenue in North-Central Brooklyn areas Bedford, Bushwick South, Crown Heights North, East Williamsburg, Park Slope and Stuyvesant Heights, with the total revenue value of $75 million.

Hotel Trades Council president Peter Ward said in 2016 speech that  Airbnb “has a terrible effect on affordable housing as we can see, and a terrible impact on the people I represent, both in its impact on affordable housing and its impact on the viability of the hotel industry.”

Though New York Governor Cuomo signed a law making it illegal to advertise already illegal short-term apartment rentals on websites, Airbnb’s ensuing challenge of the law led to a settlement in December 2016 where New York City agreed that the law would not be enforced against Airbnb and was instead aimed at individual violators.

Countering the study’s claims about Airbnb’s effect on rent, the company said 64 percent of Airbnb’s New York City hosts use income from the website to make ends meet.

This extra income is the equivalent of a 14 percent annual raise for the average middle-class family, Airbnb added.

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