It’s not surprising that the access economy – the renting of goods and services temporarily rather than selling them permanently – has increasingly become everyone’s favorite business model. This model has become a new way for many property owners to earn some extra income. Airbnb is one of the largest open access business platforms, where its users rent their residential properties for short-term stays with the cost set by the property owner. Airbnb claims a certain percentage of the fee from renters and hosts.
However, on Oct. 21 the company faced a new challenge after New York Governor Andrew Cuomo signed a bill that will heavily fine those who advertise their vacant apartments for a stay of less than 30 days. The new law is obviously going after Airbnb. The company interpreted the bill as a threat to its business and immediately filed a lawsuit against it. Airbnb argues that “it violates the company’s right to promote its business and it conflicts with internet-based business proliferate.” The New York Times states it is by far one of the “toughest” laws in the city and will make finding cheaper lodging difficult for tourists.
Airbnb isn’t the first open access company to face backlash. Open access business models are usually operated informally, at lower prices and on a personal level. They are often seen as undesirable in the eyes of the government and big corporations because these types of businesses harm the existing market, which provides these services at a higher price.
Before Airbnb, the growth of Uber caused a strike by taxi companies and governments around the world. According to them, Uber presents unfair competition to taxis since the company does not pay taxes or licensing fees.
A study conducted by the Hotel Association of New York showed that Airbnb cut into the revenue of New York hotels by about 780 million dollars in 2016, and is predicting that it will reach one billion dollars by 2018. Hoteliers also claim it is unfair that Airbnb hosts do not pay the corporate tax and are not complying with the relevant health and safety regulations. In other words, they claim that Airbnb is operating under legal loopholes.
Clearly the passing of this law was due to influence from the hotel industry and huge corporations. New York State Senator Liz Krueger, who sponsored the bill, said that it was a “huge victory for regular New Yorkers over the interests of a $30 billion corporation.” Kreuger also argued that Airbnb is encouraging illegal activities and taking business from both the hotel and housing markets.
Joe Gebbia, the founder of Airbnb, has spoken out against Krueger’s statements, saying that the passage of this bill was just an attempt to destroy the home-sharing market and protect the interests of the hotel industry.
Other legislators who supported the bill were concerned that Airbnb wasn’t paying its share in taxes, but Gebbia has made it clear that Airbnb is open to paying lodging taxes and in fact has contributed over $110 million in tax revenue worldwide.
Airbnb has a booming business in New York, and average, middle class New Yorkers are benefiting significantly from this side business. The biggest irony here is that legislators who favored this law did so under the guise that they were helping these average New Yorkers. But this law only stifles creative enterprise and continues to put the interests of big corporations over the average citizen.
Ariel Mota Alves ’20 (motaal1@stolaf.edu) is from East Timor. His major is undecided.
