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Airbnb Fights to Continue its Mission in New York

Published onJan 07, 2017
Airbnb Fights to Continue its Mission in New York

Airbnb is one of the largest home sharing networks in the world.  The network has over two million listings.  Airbnb’s website attracts its customers by creating the opportunity to “book unique homes and experience a city like a local.” An Airbnb rental is very attractive to the younger generation of travelers because of its ambiance and price.  “Airbnb has created a new opportunity for some of the better quality hostel operators that are halfway between Airbnb and a hotel to seize on a new style of hotel,” said Mr. Hanson of N.Y.U.

However, Airbnb recently ran into some problems in New York, when  Governor Andrew Cuomo signed legislation last year, imposing fines of up to $7,500 on anyone who advertises a short-term rental apartment on a home-sharing site.  Airbnb responded to this new law by stating that the new law violates the federal Communications Decency Act of 1996, which protects an advertiser from liability for the content third parties post on its website.  Additionally, Airbnb’s general counsel Rob Chesnut sent a letter to Governor Cuomo, reminding him that a “ban on advertising is, at its core, a ban on speech.” Airbnb insists that its First Amendment rights are being violated as the new law has no compelling government interest. Airbnb has also stated that this new law is meant to target the home-sharing company.

The industry most threatened by Airbnb’s home-sharing network is the hotel industry.  “According to a new study by CBRE Hotels’ Americas Research, travelers spent $2.4 billion on Airbnb lodging from October 2014 to September 2015. While that is just 1.7% of the $141 billion generated by hotels, it’s a significant jump from the same time period the previous year.”  Airbnb is an unwelcome competitor to the hotel industry as it gains popularity in providing accommodations for world travelers.  The biggest concern, though, is not that there is competition but that there is unfair competition. Katherine Lugar of the American Hotel & Lodging Association has said that much of Airbnb’s inventory is made up of “illegal hotels.”  Airbnb has stated, however, that if the company “is alerted to shared spaces or private rooms that appear to be operated by unwelcome commercial operators or that do not reflect the community vision, it generally will remove such listings.”  Nevertheless, many doubt this will be a helpful strategy.  In fact, a similar system was implemented in San Francisco, but the system did not yield significant results insomuch that the City government changed its law to hold Airbnb responsible for illegal listings.

There is tension over this new law in New York. There have been both pro-Airbnb and anti-Airbnb rallies in the City. Yet, Airbnb and New York appear to be heading towards a settlement.  The settlement would protect Airbnb from the fines under this new law, but would still leave hosts liable if they advertised a short-term apartment rental. Innovative businesses that seek to provide alternatives to consumers should pay attention to the settlement Airbnb reaches with New York.

*Airbnb and New York City settled the suit and New York City agreed to not enforce the law against Airbnb, but will enforce the law against individual violators. 

Charity Barger is a second year law student.  She received her Bachelor of Arts in Psychology, with a minor in pre-law, from the University of West Florida.  After law school, Charity hopes to work in corporate law, specializing in Mergers & Acquisitions. 

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