Travel

Airbnb Says It Has a Huge Impact on NYC's Economy, Except When It Doesn't


An architect's loft that is featured on Airbnb's rental site

Courtesy Airbnb

An architect's loft that is featured on Airbnb's rental site

What kind of impact does the online apartment rental service Airbnb have on New York’s economy? Huge! Also: tiny! At least that’s the argument the company makes in a report it released Tuesday, in which it claimed that it added $632 million to the city’s economy while taking practically nothing away from the hotel industry, its ostensible competitor.

The report is the latest move in Airbnb’s attempt to push for friendlier laws regarding its rentals in New York City. At issue is a state law keeping people from renting apartments for time periods of less than 30 days unless they are staying in them. The state’s attorney general recently subpoenaed Airbnb for the names of all its hosts, to investigate potential violations and make sure everyone’s paying taxes. Airbnb says the state is after a few bad actors, has offered to start making people who rent their apartments on the site pay more taxes, and is establishing a complaint hotline. But it’s also fighting the order to hand over the names of the 15,000 people who have rented out their apartments using its service.

Self-administered tests of economic importance should always be taken with a grain of salt. That said, Airbnb claims that the service attracted 416,000 visitors to the city between August 2012 and July 2013, or slightly under 1 percent of the total number of tourists who visited the city. Airbnb guests spent $195 million on rental fees. They also racked up other bills. Over an average stay, which at 6.4 days is significantly longer than the average hotel stay, an Airbnb guest dropped $1,300 on lodging and other purchases.

The company claims that its presence is barely felt by the hotel industry, noting that 82 percent of its visitors stay outside of Manhattan between 14th and 59th streets, where most of the city’s hotels are. It also points out that hotel occupancy rates keep rising, suggesting that the hotel industry isn’t suffering from whatever competition Airbnb rentals may be.

At the same time, the company stresses its outsize impact on one particular group: people who rent out their apartments through the service, whom it refers to as hosts. Almost half of its hosts earn less than $72,000 in total income, 29 percent are freelancers, and 87 percent of them rent out their primary residences. Interestingly, the company did not ask them whether they were actually present while they rented their apartments, the determining factor in whether such activity is legal.

But the real point, for Airbnb, is that these people need to be able to keep doing this. According to the company’s survey, 62 percent of hosts say renting out their apartments on Airbnb helps them stay in their homes. The average host makes $7,530 by booking rentals 48 nights a year, and 41 percent spend most of that on their rent or mortgage payments.

This is really where the disconnect comes up between Airbnb and its critics. The company says officials are really only interested in “slumlords,” and that most of the activity it facilitates doesn’t meet the state’s description of wrongdoing. But having a neighbor who rents an apartment to strangers almost once a week is arguably just the kind of activity lawmakers are trying to stop. Airbnb doesn’t much discuss the impact this has on people’s neighbors, dismissing it as tiny. But to others, it seems huge.

Brustein is a writer for Businessweek.com in New York.

We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus