HomeAway Says New Chicago Law Favors Airbnb

CHICAGO (CN) – Vacation rental website HomeAway.com brought a federal lawsuit against Chicago on Monday, claiming the city’s new labyrinthine home-rental ordinance unfairly favors its competitor, Airbnb.

HomeAway.com, a website that connects vacationers with privately owned homes, sued the city of Chicago in federal court Monday, alleging violations of due process, free speech and equal protection. The company also operates the short-term rental websites VRBO.com and VacationRentals.com.

More than 600 homeowners in Chicago currently list their properties on one of HomeAway’s sites, the company says.

Before last summer, the city placed no restrictions or requirements on homeowners who wished to rent out their home for a short period of time.

However, Chicago passed an ordinance in June 2016 that imposes numerous restrictions on homeowners who rent part or all of their home on a short-term basis, and provides for a $3,000 fine for a single violation.

The 58-page ordinance has been described by the Chicago Tribune as “dizzyingly complex,” and HomeAway claims no reasonable homeowner could understand how to comply with all its obligations.

The ordinance “threatens internet services such as HomeAway with crippling fines for listing short-term rentals on their platforms, and does so based upon arbitrary categories – such as ‘advertising platform’ versus ‘intermediary’ and ‘shared housing unit’ versus ‘vacation rental’ – that cannot meaningfully be distinguished from one another and that fail to provide fair notice to regulated parties of what conduct is prohibited and what conduct is required,” the complaint states.

Further, Homeaway says the city has interpreted its own vague descriptors to favor Airbnb.

“The City has actively and publicly promoted the view – in a series of public statements at the time the Ordinance was passed – that HomeAway is an ‘advertising platform’ but that Airbnb, Inc., HomeAway’s principal competitor in Chicago, is an ‘intermediary.’ The City has made these public statements despite the absence of any provision of the Ordinance that would support the distinction. In essence, the City appears to have predesignated the only two major players in the market into each of the two unintelligible categories of the Ordinance,” the lawsuit states.

HomeAway claims there is no valid distinction between the service it offers and the service offered by Airbnb, and it will be severely disadvantaged by its label as an “advertising platform” rather than an “intermediary.”

The city has essentially given Airbnb a “head start,” HomeAway says, “because the ordinance contains a ‘first come first served’ feature that allows Airbnb, the only ‘intermediary’ designated to date, to lock in customer listings in a way that will make it nearly impossible for ‘advertising platforms’ to compete.”

HomeAway asked the court to issue a preliminary injunction preventing Chicago from penalizing the company for failure to comply with the ordinance.

The city did not respond to a request for comment made after hours Monday.

HomeAway is represented by Kristin A. Linsley with Gibson, Dunn & Crutcher in San Francisco and John C. Martin with Martin Sirott in Chicago.

Philip Minardi, spokesman for HomeAway, said in a statement that the company had “no choice” but to sue.

“For two decades, HomeAway platforms have offered traveling families the chance to experience Chicago neighborhoods together. Over those years, locals have been able to utilize their homes as vacation rentals to save for retirement, cover their mortgage, or simply welcome travelers to the city they love. Those families and homeowners have built the foundation of a vibrant and responsible vacation rental community,” Minardi said. “The City’s 50-plus page short-term rental ordinance threatens that long-standing community and the platforms that serve it. Despite months of discussions with the City to reach a workable solution that would allow HomeAway to comply with the Ordinance, we were unable to reach a resolution, leaving HomeAway no choice but to file this action.”

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