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Did Airbnb really win a 'major legal victory'?

October 01, 2013|By Michael Hiltzik
  • Silver Lake resident Hope Arnold rents her place to Airbnb clients.
Silver Lake resident Hope Arnold rents her place to Airbnb clients. (Anne Cusack / Los Angeles…)

That's what the apartment-sharing firm would have us believe. But in reality, it wasn't so major.

San Francisco-based Airbnb is probably the best-known company in the "sharing economy." Its business is matching people willing to rent out their homes or even spare rooms on a short-term basis to strangers looking for a place to crash.

Like other firms in the sharing space, such as ride-sharing services Lyft and Sidecar, Airbnb is navigating a regulatory thicket. That's unsurprising, given these novel business models that threaten incumbent housing and transportation providers, as well as neighbors and fellow motorists.

As I recently reported, the ride-sharing firms notched a major victory from the California Public Utilities Commission, which made them legitimate. But accommodation-sharing companies are still in a gray area. So it's perhaps understandable that Airbnb would try to make the most out of a minor victory it scored in New York City.

The New York case arose after a city agency fined a condo owner $2,400 after his lessee rented out a room in the condo to a tourist while he was out of town. That violated a city ordinance forbidding dwellers from renting out their homes to "transients" as though they were hotel rooms. Because that's a sizable part of Airbnb's business, the firm stepped in to defend the owner.

Last week's well-trumpeted ruling from an administrative board found, however, that the lessee's roommate was present in the apartment during the Airbnb client's stay. Technically, that made the tourist a "houseguest" of the permanent occupant (the roommate). That's allowed even if the guest is paying, the board ruled.

In other words, the renter stayed within existing law, even if he stretched it a bit. But the ruling hardly warrants the chest-pounding it received from Airbnb executives who called it "a victory for the sharing economy and the countless New Yorkers who make the Airbnb community vibrant and strong," in the words of David Hantman, the firm's head of global public policy.

If anything, the ruling raises more questions about Airbnb's business in New York. Apartment dwellers renting out rooms while they remain in residence may constitute a portion of Airbnb's market. To prosper, the firm will have to serve home and condo owners who want to rent out their places while they're away.

An Airbnb spokesman wouldn't tell me how its market breaks down in shared renters versus absent renters, though he claimed the former are "a big part of Airbnb." Feel free to be skeptical. But the fact is that despite this legal victory, major or not, the firm, and sharing brokers like it, still face a host of regulatory hurdles.

Reach me at @hiltzikm on Twitter, Facebook, Google+ or by email.

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