If you need a room in the Big Apple, no worries — its plentitude of hotels range from the fabulously expensive and sumptuous to the economical and utilitarian. After all, New York City attracts about 50 million visitors per year and has about 100,000 hotel rooms to accommodate them, and many more slated for construction. That’s not counting the additional 35,000 properties available for rent through Airbnb, which counts the city as its largest market.
Now we can rephrase that statement in past tense after New York Gov. Andrew Cuomo ratified a law that levies major fines on those who do business with Airbnb.
The political power of the city hotel business is manifest. Hoteliers have seen the statistics: Airbnb users spent $2.4 billion on U.S. lodging during 2015, and no doubt much of that money otherwise would have gone to hotel coffers.
Rent your New York City residence via Airbnb and get slapped with a $1,000 fine if you’re a first-time offender. Do it a second time, and you owe the city five grand. Recidivism gets even more expensive, with a fine of $7,500 for third and ensuing offenses.
It’s not that you absolutely cannot do business with Airbnb, but the strictures applied to renting your living space are so limiting that the new legislation will effectively gut Airbnb’s operations there. The law specifically targets short-term rentals, which it defines as lease deals of less than 30 days, which is Airbnb’s meat and potatoes. People can list spaces for rent for less than 30 days only if they’re also living or staying on the premises during the visitors’ stay. Not exactly an optimal situation for either party.
New York City put these rules into effect in 2011, but the law had no real enforcement mechanism. The new law gives government the power to flog violators’ bank accounts.
Airbnb reportedly offered a list of concessions to the state in an effort to head off the law, but got brushed aside in what it claims was “backroom dealing.”
Airbnb has threatened to sue. In the meantime, there will be lots of room at the Airbnb inns in New York.
The views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.
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Mike Consol is editor of Real Assets Adviser.
