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Does Airbnb.com business model rely on illegal rentals?

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  • February 11, 2013
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I could have probably rented our extra bedroom in Monterey for $150 per night this past weekend during the Pebble Beach AT&T Pro Am golf tournament. There are other Monterey properties renting rooms and entire houses for stays next weekend on Airbnb.com. Rentals run from $60 per night in Seaside including two Monterey Bay Aquarium ticket passes to a $239 per night luxury yacht in Monterey Bay to $1,000 per night for an entire home in the woods of Carmel Highlands.

I could rent my spare bedroom, but it would be illegal for me to sign up the room on Airbnb.com and take payment without the proper Monterey city licensing for lodging.

There are 41 Airbnb.com results for Monterey rentals next weekend. Are all these rental listings on airbnb.com compliant with local lodging retailer regulations and laws?

Airbnb.com states on its home pages there are nearly 36,000 cities globally with property listings.

How do you become a lodging host on airbnb.com?

Who can host on Airbnb?

Almost anyone can be a host! It’s free to sign up and to list your space. The listings available on the site are as diverse as the hosts who list them, so you can post airbeds in apartments, entire houses, rooms in bed-and-breakfasts, hotel rooms, tree houses in the woods, boats on the water, or enchanted castles. The list goes on and on! Find out more about our room types.

Since almost anyone can be a host, it is important to learn how to play it safe on Airbnb in our Trust & Safety Center.

https://www.airbnb.com/help/question/hosting/18 

Amsterdam and New York are popular locations for Airbnb and other peer-to-peer room/apartment/house/boat stay rentals.

News stories about problems associated with hosts listing properties for rent on sites like Airbnb.com came to my attention with an article about Amsterdam and Airbnb.com from website TheNextWeb.com:

Airbnb could be banned in Amsterdam: Local authorities are now hunting for illegal hotels [UPDATED] (Feb 2, 2013) – TheNextWeb.com.

The original article on TheNextWeb.com came out February 2 and was disputed by both the Amsterdam city government and airbnb.com statements. Then TheNextWeb.com published a follow-up article in response to the criticism from Amsterdam government officials.

Amsterdam doesn’t ‘ban’ AirBnB but says renting out without a permit is illegal. Do you have a permit? (Feb 7, 2013) – TheNextWeb.com.

I found the Amsterdam articles to be interesting reads. Amsterdam has 4,191 listings on Airbnb and many of these apartments are being rented illegally without proper lodging permits.

New York Times published a story in December 2012 about airbnb.com rentals in New York City causing problems for landlords and renters when neighbors complain about strangers living in the apartment buildings. The fines can be heavy.

A Warning for Hosts of Airbnb Travelers – Ron Lieber – New York Times (December 1, 2012).

For me personally, the two summers I spent 1997 and 1998 in Ireland, Northern Ireland and Scotland living in B&B houses turned me on to hotel travel. Engaging locals is an important part of travel, yet I like the option of being able to disengage conversations and step away at my leisure without being rude. That is often not so easy when you are staying in someone else’s home with them.

Have sites like airbnb.com worked for you as a consumer or host?

 

Ric Garrido, writer and owner of Loyalty Traveler, shares news and views on hotels, hotel loyalty programs and vacation destinations for frequent guests. You can follow Loyalty Traveler on Twitter and Facebook and RSS feed.

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12 Comments

  • NB February 11, 2013

    Of course, one of the great things about the internet is that it is anarchic and tends to destroy all sorts of restrictive practices. That’s why governments hate it.

    So, we have lots of local governments putting restrictions on people doing what they want to do with their own homes. Some of those restrictions come from wanting to collect tax, some from safety related issues, some from a general desire to ban everything that they don’t specifically permit. And it used to be that it was next to impossible to get around these bans.

    Now we have the internet and, in this case, AirBnB. Yes landlords should pay their taxes, of course, and yes the properties should be habitable and safe (as should all housing). But someone letting out a spare room on a temporary basis is entirely different from a hotel and does not need the heavy hand of local politicians taking bribes to permit it. As long as the house is up to code, and the income is declared and taxed, it should be permitted.

  • Ric Garrido February 11, 2013

    @NB – thanks for your thoughtful comment. I agree that much of this comes down to peer-to-peer business through the internet along the lines of eBay and CraigsList and fewer restrictions and regulations assist commerce.

    Yet, there are also localities struggling with tax revenues. Should municipalities take more interest in the homegrown rental market?

  • Greg Z February 11, 2013

    What a douche bag post! Wow, as (now) a past reader I am really upset at this post. Are you going out of your way to hurt airbnb? An innovative and valuable service? Taxes are the responsibility of the owner and none of your concern.

    Go busy yourself reviewing business class or the bathroom of your hotel and leave taxes and laws to big kids.

  • JoshL February 11, 2013

    @Greg, calm down sir. Ric isn’t attacking the legality of their business model, he’s laying out the facts to start a discussion. Yes, he presented several sides, but is that bad? Take a deep breath and read it again.

  • Dan February 11, 2013

    @greg,

    If there is anything wrong with this post it is that it is discussing an issue that most people are already aware of. The Pariasan city government has been going after these illegal renters for years. Many other localities have as well. If you think this blog post is going to have any affect on Airbnb you might want to consider reading the 3 month old NYT link the article or google “illegal rentals and Paris/NYC/Amsterdam” etc

  • Rik February 11, 2013

    airbnb screwed me over. i wish I’d booked a hotel instead!

  • Katherine February 11, 2013

    I don’t think that Airbnb relies on illegal immigrants at all. In my experience, it’s worked as it says it does. I’ve used Airbnb for all of my traveling across the US this past year. Every sort of “renting out x” or subletting site (e.g. Craigslist, the internet in general) will be open to the possibility of illegal immigrants taking advantage of it.

    I love Airbnb. It’s a great, economical alternative to hostels and perfect for travelers on a budget or those who just want to live in a city like a local. I’m currently traveling all over right now, so I can’t rent out a room at my place, but wouldn’t hesitate to. As a host, you can screen all bookings and reject them as you please. Every profile can be reviewed and linked to other accounts like Facebook and Linkedin for additional security.

  • Charles Clarke February 11, 2013

    Hmmm, I’m guessing Greg Z is one of those illegal hosts and from his tax comments, I’d say that he isn’t reporting his income from this either. Though I’d guess he could be from airbnb also. And taxes are a concern of everyone. Someone not paying their taxes forces other folks to pay more (even if you wish the government would spend less).

    I loved the comments in the NY Times article by Janan New, the executive director of the San Francisco Apartment Association about evicting anyone doing this. Running a business, especially an illegal one, out of your apartment is grounds for eviction by most leases. If your rent is below market for some reason, e.g. rent control, then you’d have to be a fool to do this. Smart landlords have watches set up for the names and addresses of their units. Advertise yours and they will get an email letting them know about your ad. Good luck finding yourself a new place with an eviction on your record!

    Ric, thank you for spreading the word about a possibly cheaper way for folks to travel and/or make money on their own place as well as some of the pitfalls for folks to watch out for.

  • Ric Garrido February 11, 2013

    Airbnb.com is a name I have seen around. I never used them and I have no real opinion about their business model. Plenty of travelers I meet are people who would likely use the airbnb.com booking service to save money or meet locals.

    I found the Amsterdam articles interesting since I saw what appeared to be this this kind of transient rental activity in an apartment one week on the Prinsengracht while staying across the canal at The Pulitzer Hotel.

  • romsdeals February 11, 2013

    I had two great stays with Airbnb in Rome and Florence. I just made a post about it today! I would love to rent out my place if I had a separated guest room. I would not feel comfortable renting out my room inside my home.

  • Scottrick February 11, 2013

    I agree with maintaining some privacy, which a hotel does best. But I have rented a room here or there. If you choose wisely, you can get all the comforts of home at a decent price, but I still wouldn’t rent a room if the owners were still present — I’d want the entire home.

  • Karlene February 13, 2013

    Hey I love the service that Airbnb provides. It allows a win win situation. I had to attend a week long workshop in New York (Manhatten) with hours from 9am to as late as 10pm. cost of a hotel room would have been anywhere between $260 to $500+ and I wouldn’t have been able to enjoy the room. A waste of money. I booked an Airbnb room at $28 a day. A woman had 3 xtra rooms as a result of family moving out. Other guests were from England, and China. It was great to meet other people. Although I found in NY you do have to beware that some realtors try to pose as an individual with a room in their home and try to get you to fill out their paperwork. I’ve also booked in Sedona AZ, and Germany. They’ve all been good experiences.

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