Regulating the Sharing Economy

Regulating the Sharing Economy
by Emma Catlett

Protecting consumers and  the hospitality industry are only two of New York State's motivations in regulating Airbnb in New York City, one of the largest companies in the sharing economy. New York Attorney General Eric Schneiderman claims 72% of the of the 35,000 rentals in New York City are illegally operated. It particularly accuses the large scale renters, or those operating more than a few dozen units, of illegally operating hotels without licenses. About 2,000 Airbnb units in New York City are rented for more than six months of the year, meaning, according to Mr Schneiderman, they are operating as hotels.

 New York's Airbnb climate is much more hostile than that in San Francisco, which has legalized the crowd sourced hostel movement. It is tasked with creating policy to regulate or illegalize the business. The hotel industry is concerned Airbnb is stealthily winning clients without submitting to the regulations to which the traditional hotel industry must submit. New York City rentals in the Lower East Side, Soho, Chelsea, Chinatown, and Hell's Kitchen comprise 40% of Airbnb renters' revenue in New York City, although Airbnb emphasizes that only 18% of its units are in traditional tourist areas (areas with high tourist traffic and hotel demand). Airbnb argues that its members (those renting out their own units) are able to provide a more personalized and authentic stay in the City, benefitting tourism and giving individuals the chance to break into the hoteling industry.

Those concerned with the housing stock in New York City criticize Airbnb's large scale renters for driving up the prices of the real estate in the area. The competitive housing market does not have room for housing stock to decline (and transfer to the hoteling industry). Clearly, there are a number of interests at stake in regulating this business. Unfortunately, regulation is difficult when renters are acting almost entirely independent of the company. Such is the sharing economy.


Sources:
"Airbnb Listings Mostly Illegal, New York State Contends" by David Streitfield
http://www.nytimes.com/2014/10/16/business/airbnb-listings-mostly-illegal-state-contends.html?_r=0