Analysis Examines How Much Illegal Money Airbnb Makes in New York
BY Sam Roudman | Thursday, November 7 2013
Does Airbnb benefit middle class renters, or is it enabling de facto slumlords to buy up apartments and distort rental markets? It turns out not to be an either/or proposition. In New York, a recent analysis from Tom Slee shows that while the majority of New York’s Airbnb hosts appear to operate within the state’s law, not renting out their entire apartments or secondary properties on a short term basis, almost half of Airbnb's revenue comes from hosts operating outside it.
To get to his conclusion Slee ran a python program to pick up as many Airbnb listings in New York as he could find.
“Of the 7112 hosts I found, 6038 rent one room, which is 85%. An even greater percentage (92%) rent from a single address, but there is no way to confirm if it is 'the home in which they live."
These numbers, which Slee admits are not complete (Airbnb claims 15,000 hosts in New York), but representative, match up with Airbnb claims that 87 percent of New Yorkers rent in homes in which they live. But according to Slee they don’t tell the whole story:
“But looking at it another way, only 63% (6038 of 9527) of rooms are single-room offerings (that is, a host who offers only one place to stay). And only 53% (60439 of 114659) of bookings are in single-room offerings (using reviews as a proxy for bookings). Assuming the same length of stay in each place, the amount of revenue that comes from single-room renters is 54%. That is, very nearly half of Airbnb’s business is from hosts who are renting multiple offerings."
In a follow up email to techPresident, Slee explained the relevance of his findings:
If they had 100 hosts, 99 of whom rented out one room once a month and one of whom rented out 10 rooms 10 times a month, then Airbnb can describe its community two ways:
- 99% of our hosts are regular people sharing out a spare room to earn a little cash and to make ends meet.
- Half our income comes from professional landlords running short-term rental operations.
Airbnb is continually saying the first of these two, and is silent on the second. I'm just trying to correct the picture they paint.
Slee’s analysis comes in the midst of increased scrutiny into the company’s operations. After New York’s attorney general demanded user information from Airbnb to suss out renters abusing the system, the company released a research report highlighting its positive impact in its largest market. The report, which doesn’t cite its sources or show how it came to its conclusion, says that Airbnb generated $632 million in economic activity in one year in New York, and that $104 million of that activity occurred outside of Manhattan.
A recent New York Times article describes the full spectrum of Airbnb hosts, from an artist and real estate agent, who legally rents a room in her apartment, to a man who illegally rents a string of apartments he doesn’t live in, a vocation he describes as “beyond lucrative.” The article quotes one of Attorney General Schneiderman’s spokesman on why the state is going after Airbnb:
“Airbnb isn’t standing up for average New Yorkers who rent out their apartments from time to time — Airbnb is standing up for highly profitable, illegal businesses that make up a huge chunk of its corporate revenue.”
With Slee’s analysis, we can all see just how big that chunk is.