In New York, 72 Percent of Airbnb’s Rentals Are Illegal, and Other Fun Facts

Photograph by Andrew Rowat/Getty Images

New York Attorney General Eric Schneiderman just threw a bunch of numbers (PDF) at his running dispute with Airbnb. After examining data from the company’s rentals in New York from the beginning of 2010 through June 2, 2014, his office released a report on Thursday that found 72 percent of rentals in the city appear to be illegal.

Airbnb can’t be surprised by this—it’s likely why it fought so hard to keep this data out of Schneiderman’s hands. The company issued a statement saying it was time to “move forward,” while also claiming that the legal situation in New York was too complicated to make any blanket statement about its business. The laws cited in Schneiderman’s report are meant to prevent illegal hotels and protect the availability of affordable housing.

This regulatory fight is sure to continue, and the data in the new report highlight the challenges that both Airbnb and its opponents will face. Here’s a look at a few of the most interesting numbers:

Commercial hosts account for 36 percent of rentals. This is Airbnb’s big conundrum as it jousts with regulators in New York and elsewhere. The company is not lying when it says most hosts are people renting out their own apartments for a little extra money. According to the report, 94 percent of hosts rent out two or fewer units. But as a business, Airbnb leans heavily on the exceptions. Commercial renters—which Schneiderman defines as someone who rents out more than two apartments—made $168 million in the period under review. Schneiderman’s numbers stop in June, and Airbnb has said it’s already working to root out commercial operators. So the situation may have changed.

The top earner in New York made $6.8 million—and sent $800,000 to Airbnb. There were 12 operations in New York that made more than $1 million over the course of the study. The top host controlled 272 units and brought in $6.8 million in rental revenue, accounting for more than 2 percent of total host revenue.

Almost 200 units were booked for more than 365 days in 2013. Another problematic minority of Airbnb hosts are those who run hostels. The attorney general found that the 10 most-booked listings averaged 1,920 booked nights per year—or about 5.3 bookings per night each. The most-booked property had almost 13 guests per night. Flophouses scare fire officials because they put undue strain on buildings that were built for fewer people. These Airbnb hostels must also be hell on the neighbors.

Airbnb hosts avoided paying $33.5 million in taxes. New York charges a hotel room occupancy tax of 5.875 percent that would seem to apply to all Airbnb rentals. The company has already said it’s willing to begin collecting taxes from its hosts, which it now does in San Francisco. Of the matters of contention between Airbnb and its New York regulators, this one appears to be the easiest to resolve.

Bookings rose by a factor of 12 in the last four years. If Airbnb has a legal problem, Schneiderman has a political one. In 2010 there were 20,808 private bookings on Airbnb in New York; this year there will be an estimated 243,019. (All of the numbers in the report look at private bookings, which exclude people renting out apartments where they are present, an activity that doesn’t violate the hotel laws.) If Airbnb consisted of just a handful of scofflaws, it would be a relatively straightforward problem for the state’s top law enforcement official. Instead, it’s a popular and growing form of economic exchange that hasn’t existed in the past.

San Francisco recently passed a law aiming to isolate the commercial renters on Airbnb’s website from people using it to share their own homes. It’s an attempt to make it clear that the latter activity is legal, with some restrictions. At some point, Airbnb and New York are going to have to come up with a compromise along similar lines.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE