How hotels and Airbnb can coexist
New York City sued a startup that provides services for listings on Airbnb Inc. and other home-sharing sites, escalating its war on short-term apartment rentals.
The city said Guesty Inc.’s business model is focused on helping people flout laws against short-term rentals. In the lawsuit, filed Monday in state court in Manhattan, the mayor’s office of special enforcement said it seeks records and testimony to determine the impact of Guesty’s business on New York’s housing market and neighborhoods.
Founded in 2013 in Tel Aviv and backed by startup incubator Y-Combinator, Guesty attracted US$60 million in funding as of March 2019. In its lawsuit, the city took particular note of Guesty’s claim of “full integration” with Airbnb’s site -- noting that Guesty had in its marketing referred to long-term tenants as a “ball and chain” hobbling landlords.
“Guesty is apparently aware of New York laws restricting the conversion of long-term permanent dwellings intended for ordinary New Yorkers making the city their home -- the people Guesty believes are a ‘ball and chain,’” the city said in the lawsuit.
Guesty had no immediate comment on the lawsuit and Airbnb declined to comment.
Guesty’s platform lets users manage listings on multiple websites, including Airbnb, Booking.com, and Expedia.com’s Homeaway, and can connect them with providers of services like cleaning and key handovers.
Supported by the city’s powerful hotel workers’ union, Mayor Bill De Blasio has been locked in a yearslong battle with Airbnb. The city prohibits owners from renting out their entire apartments or homes for less than 30 days without being present in the unit.
As a result, as many as two-thirds of Airbnb’s listings in New York City could violate the law, according to the city. The city has boosted its budget to about US$8 million this year to hunt down those listings -- a tenfold increase in four years.
Last year, New York introduced a new law that would force Airbnb and HomeAway to turn over the names, addresses and phone numbers of their hosts. The companies sued claiming the law violated privacy rights. The home-share companies won a temporary injunction while the case winds its way through the courts and are now in talks to resolve the lawsuit.
A successful agreement in New York would pave the way for a smoother stock listing for San Francisco-based Airbnb, which has said its plans to go public this year and was last privately valued at US$31 billion.