Sex, Lies and Airbnb
It may not be obvious that renting out your apartment on a short-term basis is a slippery slope to hell, but according to recent news reports, Airbnb is basically a mass brothel. The New York Post has thrice recounted the tale of upstanding citizens who come home to find bodies intermingling in the boudoir. According to the Post, landlords, a notoriously law-abiding bunch, have hired private eyes to help evict tenants who unknowingly sublet their apartments to sex workers.
The debate about Airbnb is quickly devolving into a whore-a-phobia worthy of Hawthorne. It’s ironic, considering that hotels usually play host to sex workers without incurring any hysteria from the press. But using an unpopular—and in this case, peripheral—constituency to stoke public outrage is nothing new. If this were the 1980s, the stories would be about gay men renting apartments and spreading AIDS. It’s a distraction from a far more complicated discussion about the effect of the sharing economy on the public good, and the hospitality industry as a whole.
A recent study from the Boston University School of Management looked at Texas and found that Airbnb had the biggest impact on down-market hotels, suggesting that budget travelers benefit the most from the service the website provides. Hotels that cater to business travel were unaffected.
In New York City hotels are at their highest occupancy in a decade, with room rates averaging $281 a night, according to NYC & Co. Planned construction will add at least 11,000 rooms by 2016, and last year 52 million tourists flooded the Big Apple. So what’s the problem?
First, the hoteliers want to preserve their monopoly, and keep profits high. Second, the union of hotel workers—the Hotel Trades Council—negotiates wages based in part on hotel revenues, and is concerned that supply will exceed demand. Third, housing advocates worry about neighborhood destabilization and the loss of available housing stock as landlords flip residential buildings into hotels.
The attorney general has gotten involved, investigating Airbnb for violating the illegal hotels law, which prohibits a New York City tenant from subletting short-term. Someone can cat-sit while a tenant is away on vacation, but charge them a daily room rate and it’s grounds for eviction. That’s one thing sex and short-term rentals have in common: They’re both legal to give away but illegal to sell.
Lost amid the subpoenas seems to be any real discussion about regulation. The Boston University study posits that Airbnb represents a supply-pushed expansion to the economy. In the long run, that means a decrease in consumer prices and an increase in potential tax revenue.
Airbnb has proposed an exemption to the statute, which would allow tenants to sublet their primary and secondary homes. The company argues that the tens of millions in tax revenue they’re willing to pay will benefit the city, and that excluding large-scale building owners from the exemption will mitigate any negative impact on neighborhoods. Policymakers might also consider a cap on the number of days tenants can sublet their apartments on Airbnb per year, to reduce the revolving door effect on residential buildings. A regulatory framework would also hurt Airbnb’s growth curve, and slow the anticipated negative-demand shock effects on the industry.
Fundamentally, though, opponents don’t favor regulation; they want to preserve an industry that fears it might go the way of the video store. Structural unemployment is a serious concern, but the research is inconclusive on whether Airbnb will even negate formal hospitality. Either way, it’s useless to resist the forces of technology. New York State didn’t ban digital film just to keep the Kodak processing plant open. In an increasingly expensive city, the sharing economy actually reduces costs, and makes it easier to travel while helping others pay their rent. A regulatory solution is far more realistic and effective than a punitive one that fails to address the public interest.