Airbnb Takes On San Francisco And New York

Airbnb has been in tough spots before.

Back in 2009, the company was part of the Y Combinator start-up accelerator but growth prospects looked bleak. Revenue flatlined at $200 per week and the founders (as the story goes) had all maxed out their credit cards. But some quick thinking, using well-shot photos of the properties, managed to draw in more users and save the company. 

Today the home-sharing company is worth $30B and is the dominant player in the space. Yet as the company continues to grow, it has run up against a wall of state and local regulatory pushback from San Francisco and New York. 

Critics allege Airbnb rentals cut down on affordable housing units, further exacerbating the housing crisis in places like the Bay Area, where the issue is particularly acute. San Francisco supervisor David Campos, who is leading the city’s efforts to regulate Airbnb, has sponsored legislation that requires the company to monitor and validate rentals listed on the website. 

“The culture of this company at the top is: we play by our own rules and don’t want any regulation by San Francisco or any other jurisdiction,” Campos tells Bisnow. “It’s very arrogant.” 

In New York, Gov. Andrew Cuomo signed a bill last month that would fine users who list properties on the platform. Assemblywoman Linda Rosenthal, a sponsor of the bill, told the New York Times that she hoped the law would set a precedent around the world on how cities can protect their affordable housing stock against Airbnb.

Airbnb is fighting back. In response to the added regulation, the company has gone to the courts, claiming the burden of new requirements would cause it “irreparable harm.”

It has also taken voluntary measures to address the concerns legislators have regarding the its business model and practices. For example, the company now limits one user to one property in San Francisco in a move to cut down on the number of “illegal” hotels.

"We're committed to working with city officials across the US and around the world on fair home sharing rules, which we've demonstrated in San Francisco by removing nearly 400 commercial operators and over 500 so-called hacker hostels from our platform," the company said in a statement.

It has also introduced a new community commitment policy that forbids Airbnb users from discriminating against renters on the grounds of race, ethnicity, gender or other protected classes. 

Campos says these measures do not go far enough to resolve the central grievances cities have with the company. 

“They could have dealt with their issues if they took some basic steps early on to deal with their problems,” he says. “Now I think it is too little too late.”