Investors just valued lodging rental site Airbnb at $10 billion. It got there over the past six years through a sort of don’t-ask/don’t-tell interpretation of existing laws, contracts and taxes.
Sure, a large part of the company’s marketplace is comprised of non-controversial listings from owners whose rental activities don’t bother their neighbors or local authorities. And Airbnb’s global community of hosts and guests is real.
But there’s also the fact that Airbnb has skated for years around lease agreement prohibitions, local hotel regulations and existing tax laws. As an open marketplace, the company put the burden of compliance on hosts themselves. Many of them didn’t comply.
Now, the company is cleaning up its act. Today it said it has removed 2,000 listings in New York from members who are “bad actors” because they do things like rent a large number of listings and get low ratings.
The hosts are allowed to support existing reservations, but they’ve been pulled from search and new reservations.
Airbnb claims this is a process it started earlier this year, but the host cleanup announcement coincides with a court date tomorrow in the standoff between Airbnb and New York Attorney General Eric Schneiderman, who is investigating the site for illegal hosting activity.
The state, meanwhile, cited some stats of its own on Monday, saying that in addition to these super-active hosts, one of whom had 80 separate listings, some 64 percent of 19,500 listings were for entire apartments. New York law currently prohibits people from renting their apartments for less than 30 days unless they are present.
But removing bad actors is just one part of Airbnb’s ongoing cleanup. The company is now offering to collect hotel taxes in New York City, San Francisco and Portland, Ore., starting in June.
Under the new plan, guests would pay taxes directly to Airbnb, and the company would then pass them along to local authorities. That would work because Airbnb already handles bookings and payments, unlike competitors like VRBO.
If regulations allowed it, Airbnb said it expects it would pay New York more than $21 million annually in taxes.
Separately, San Francisco Supervisor David Chiu last week proposed legislation that would allow short-term rentals in Airbnb’s home city. Hosts would have to register with the city, occupy their unit at least 75 percent of the year, pay hotel taxes, get insurance and abide by existing rental agreements with their landlords. The initial reaction to the proposal was mixed.
While less specific, a petition to change New York law to explicitly legalize Airbnb activity has more than 230,000 signatures on Peers.com. Laws have already been changed in Airbnb’s favor in Hamburg, Amsterdam and France.
In a blog post, Airbnb public policy head David Hantman wrote today, “We are a young company, we are constantly learning. We are committed to making cities better and will, to the extent possible, investigate complaints when we receive them. And we will be taking even more steps to make communities stronger in the years ahead.”
Sure, cities and states wouldn’t have taken Airbnb seriously until it was big enough to matter. But this is a pretty clear transition from Part One to Part Two in the startup playbook of build first, regulate later.
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