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Mayor Targets Two Illegal-Hotel Operators; AG Releases Airbnb Report

Frank Lovece in Legal/Financial on October 17, 2014

59 Fifth Avenue, 5 W. 31st Street, Manhattan

New York City Mayor Bill de Blasio
Mayor Bill de Blasio
Oct. 17, 2014

The Mayor's Office of Special Enforcement filed a motion in State Supreme Court enjoining the owners of 59 Fifth Avenue and 5 West 31st Street from continuing to allow long-term residential units to be used as short-term rentals. The owners of the two rental buildings had been using Airbnb and other apartment-sharing companies to advertise or short-term rentals in violation of state law.

Co-op and Condo Board Concern

Illegal hoteling has been of particular concern to the cooperative and condominium community, creating issues of safety to residents, property upkeep and non-owner-occupancy that can affect mortgage lending. Co-op boards by law may allow or reject primary residents for reasons including financial stability, criminal record and other background factors. As well, in addition to State and City laws forbidding rentals for less than 30 consecutive days, many co-ops and condos prohibit hoteling in their bylaws. The City accepts 311 reports of suspected violations.

Yesterday's report by Attorney General Eric Schneiderman, analyzing Airbnb bookings from January 1, 2010, through June 2, 2014, found that major commercial operators, like the those included in the injunction action, control more than a third of all rentals and revenue generated. It found a dozen buildings operating as de facto hotels, rendering them largely unavailable for use by long-term residents.

According to the report, 72 percent of Airbnb units in New York City violate state law and commercial operators make up 6 percent of all hosts but supply more 36 percent of the units and generate 37 percent, or $168 million, of all host revenue. More than 100 commercial users each controlled 10 or more unique Airbnb units, accounting for over 47,000 reservations and earning nearly $60 million.

More Expensive Than Hotel Rooms

The highest-earning Airbnb host controlled 272 units, booked over 3,000 reservations, charged an average of $358.19 a night — far more than the 2013 hotel average room-rate of $290 — and received $6.8 million in revenue.

"Airbnb's cheery ads with people having lovely brunch with their 'guests' hide an ugly reality," State Assembly Member Richard N. Gottfried, a sponsor of the 2010 short-term occupancy law, said in a statement. "Illegal hotel renting violates fire and safety codes, makes life a nightmare for law-abiding neighbors who have strangers coming and going in their buildings at all hours, robs the City of urgently needed housing and is often a horrible experience for tourists. Strong enforcement of the illegal-hotel law by Mayor de Blasio is a big step ahead."


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