SF Examiner: Airbnb has become its own worst enemy

By Steven Hill, San Francisco Examiner, November 1, 2015

Airbnb, the giant app-based hotel service, has disrupted housing markets and people’s lives in city after city. In response, many cities are cracking down, and that’s really a shame because Airbnb began as a good idea — it empowered “regular people” hosts, allowing them to earn a few extra dollars by renting out a spare room or couch to tourists.

Unfortunately, Airbnb has drifted very far from its roots. Today, independent data analysis of its business practices in numerous cities has revealed that Airbnb has morphed into a giant loophole for professional real-estate operatives. Airbnb is allowing an increasing number of these professionals to evade city laws that are crucial for preserving the housing stock for local residents. Consequently, Airbnb’s service is
eating up affordable housing.

In my research, I have found a consistent pattern. In San Francisco, various studies have found that 40 percent of revenue comes from Airbnb hosts with multiple listings. In Los Angeles, a separate study revealed that 89 percent of the company’s revenue was generated by professional landlords and agencies. In New York City, an investigation by state Attorney General Eric Schneiderman found that nearly 40 percent of Airbnb’s revenue — some $168 million — came from hosts who had at least three listings on the site.

Let’s be clear: Hosts controlling multiple properties are not “regular people” renting a spare room. These are professional operators, some of whom own or control dozens of properties. Some “hosts” in San Francisco are property managers renting out dozens of homes on behalf of absentee owners. Others are landlords who have evicted entire buildings of tenants in rent-controlled apartments, converting them into Airbnb tourist hotels.

A leaked memo from real-estate developer Coldwell Banker Commercial estimated that a landlord could more than double net annual income by renting to Airbnb tourists instead of local residents. This is a seriously lucrative enterprise that pits the housing needs of locals against tourists.

Consequently, various cities have begun to crack down. In New York City, the city council appears ready to raise the current $1,000 fine for violations to as high as $50,000. Beach town Santa Monica has banned Airbnb rentals unless the homeowner is on-site, barring absentee owners. Coronado has banned short-term rentals, Solana Beach has limited them to seven-day minimum stays and Encinitas has permitted them but not in multi-family dwellings or condominiums.

As San Franciscans contemplate Proposition F, I would like to address the “regular people” hosts who are trying to use Airbnb to make ends meet. I’m with you. Your need is legitimate. But you are being poorly served by Airbnb. The company knows that its service has been invaded by professional operatives, because it has access to its own data. Airbnb could have designed its platform to serve your needs, instead of the professionals.

Instead, it is cynically using you, the “regular people,” as human shields to hide behind and to deflect criticism, so that the public and the media won’t recognize what it has become.

Showing corporate leadership, Airbnb still could:

1. De-list from its website anyone renting out multiple properties. It has the data and knows who they are.

2. Cooperate with cities like San Francisco and Portland, which require hosts to register with the city, by de-listing any of the thousands of unregistered hosts.

3. Supply the data cities need to enforce regulations and taxation, including the number of rental nights and rates charged by each host. Without this data, San Francisco’s current law is completely unenforceable.

Airbnb could have enacted those on its own. Instead, it is spending more than $8 million to defeat Prop. F, which proposes reasonable regulations. If Airbnb already had done the right thing, Prop. F would have been unnecessary.

Steven Hill is a senior fellow with the New America Foundation and author of “Raw Deal: How the Uber Economy and Runaway Capitalism are Screwing American Workers.”

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