A new battle in the war against innovation is heating up in New York City where the hotel industry is lobbying to get home-sharing company Airbnb banned in the city.
Enlisting advocates for affordable housing to join their cause, hotel industry workers are lining up to put pressure on the City Council to ban what they assert are unsafe, illegal hotels which they argue are exacerbating the city’s housing shortage.
This week, proponents and advocates lined up to testify before a City Council hearing. Outside Airbnb workers handed out T-shirts and stickers promoting the company, while hotel workers and other activists arrived with signs protesting the company. They contend Airbnb is disrupting the short-term housing market with more affordable options.
Newsweek reports on the issue:
New York state law bars tenants and landlords from renting out their apartments for less than 30 days unless they’re living in the same unit. Airbnb believes the rules should changed, while the city council wants the company to obey the law, which would greatly narrow Airbnb’s customer base.
The council was particularly concerned with Airbnb’s role in promoting illegal hotels, which a landlord creates when he or she rents out an apartment for a short-term lease. Critics say this practice is unsafe as illegal hotels often aren’t up to the city’s fire and safety standards.
Last year, New York Attorney General Eric Schneiderman subpoenaed Airbnb for customer data to determine how many illegal hotels the company was supporting. Just 6 percent of Airbnb hosts, he found, controlled more than a third of all the company’s listing—a clear indication of widespread illegality. One host had 272 apartments listed on the site, earning $6.8 million a year in revenue.
As a result of Schneiderman’s findings, Airbnb removed 2,000 hosts from its website and now says it doesn’t support any illegal hotels.
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Though the council took issue with Airbnb’s business model, they acknowledged the convenience of the service for users, noting that rooms are often less expensive than hotels. Since it came to New York in 2012, Airbnb has been popular among tourists and business travelers, many of whom may not know they’re staying in an illegal residence.
The New York Post’s editorial board has an interesting take on this issue. They argue that NYC is hypocritical when it chides Airbnb. As they note:
Airbnb has its issues. For one thing, the service has to do a better job policing its customers. And if the laws are bad, they should be changed, not disobeyed.
But we’ll never take New York’s pols seriously on unaffordability until they show themselves willing to address the biggest factor of all: the counterproductive regime of rent control and rent stabilization.
The backlash may seem bad for Airbnb but it’s actually a good sign. Clashes like this occur when innovation meets the establishment. Like the battles ride-sharing companies Uber and Lyft face, the market is presenting new innovative options for customers, but established businesses haven’t experienced real competition that changes the way their industries work until now. It’s unsettling to them and it threatens their revenue streams.
Unfortunately, instead of looking for ways to innovate, they protest and lobby government to secure and strengthen their protections. In the meantime, they are losing support and demand from customers who will follow the products or services that offers the best value, price, and amenities.
If you’ve ever visited or lived in New York City, you are very acquainted with how expensive it is. Cheaper, safe living options are a welcome alterative for customers (especially those staying on a short-term basis such as business travels on assignment). Like cab drivers who have created far more discontent through traffic-snarling protests, hotel workers will probably find that customers have little sympathy for the over-priced costs of their hotels.
It's exciting to see a revolution in our economy and we welcome the innovation revolution.