Website turns New Yorkers into budding hoteliers

Call it Match.com for travelers seeking a deal and hosts looking to make a buck.

The website Airbnb, connects visitors looking to rent a spare apartment, bedroom or even a bunk from a local host who may or may not be present. And in New York, where real estate is king, the site could be a real game-changer, where it’s raising legal questions in many apartment buildings and also offering a challenge to the big-money hotel industry.

Among the star hosts of the city’s Airbnb scene are Michael Thurman, 48, a political science professor and Randy Goya, 47, an architect, who legally rent out the spare room with ensuite bath and private entrance in their handsome Bedford Stuyvesant brownstone — for a starting price of $69 a night.

Driving Airbnb's popularity are skyrocketing hotel rates combined with a bevy of New Yorkers seeking innovative ways to defray ever escalating expenses.

“The hotel industry has priced itself completely out of the range of normal travelers,” opined Thurman.

Thurman, who relishes hosting and entertaining, was delighted to see his home’s popularity on Airbnb soar to “number one in Brooklyn and number three in NYC” and is now bucking to be number one citywide.

There are, of course, risks for both parties in the wild west of self-arranged home rental: This summer, two California Airbnb hosts made news when they complained that paying guests wound up vandalizing and burglarizing their homes. And, as with hotel bookings made remotely, travelers may occasionally find that expectation and reality fail to align.

It also turns out that many of the 7,000 local offerings on the rapturously popular site, lauded by both tourists and hosts alike, are technically illegal.

A state law passed last year – intended to stop illegal hotels from usurping much-needed housing stock, but incidentally supported by the Hotel Association of New York City - made it illegal to rent out units in most multiple dwelling units for less than 30 days. (A brownstone like Thurman’s is legal.)

The exact boundaries of the broadly written law are blurry and whether it is being or will be enforced is a mystery. The City’s Department of Buildings referred inquiries to the Mayor’s Office for Special Enforcement, which did not respond to requests for comment.

Airbnb punted when asked whether it had ever been the target of an enforcement effort or what accommodations it might make to travelers who find a stay aborted.

In an emailed statement, a spokeswoman said, “Our Terms of Service require all users of our service to comply with applicable local and state laws and regulations.”

Plenty of renters, home and building owners are illicitly renting out their properties via Airbnb but keep a “low profile” to avoid triggering an inspection, acknowledged Frank Ricci, director of government affairs for the Rent Stabilization Association, a group of property owners.

Ricci deemed it likely that some rent-controlled and stabilized renters “make more in two or three nights renting out a second or third bedroom than they pay in rent.”

Technically, most renters (and co-op owners) risk eviction for failing to get permission from their landlords or coop boards for each individual stay. But if a building does not have a doorman willing to tell the owner about unusual suitcase-toting traffic, “it’s very hard to police,” Ricci said.

Ricci is less exorcised by renters’ violating their leases for profit than he is by government curtailing the ways in which owners might use their properties.

“Taxes, water and sewer bills are driving this whole thing,” said Ricci, of the RSA. “Taxes have gone up 100% in the last 10 years on most multiple dwellings.” In some cases, tourist rentals subsidize long-term tenants whose rents are controlled, he said.

“I get a much better yield through Airbnb” than from conventionally renting, said Keith Siilats, a former portfolio hedge fund manager is now a graduate student at Stanford University.

He rents out his own two-bedroom, two-bath spread and another unit, in a building he owns on the Lower East Side. Siilats had not known about the law and was unclear as to whether he was in violation, but said he has used both units as his primary residence, which might make him exempt. If he finds that he cannot continue renting legally, “I might have to start renting 30 days at a time.”

Hosts and guests meeting up via Internet services such as Airbnb, reflects “the democratization of society,” allowing people to circumvent the hotel industrial complex for a much friendlier, community-building brand of commerce, Thurman argued.

Airbnb is a welcome and superior alternative to the “blah,” hotel experience, added Farrell, who describes herself as “the kind of person who loves independent bookstores.”

Many of the industries upon which New York City depends would suffer terribly if 10008-B were to be aggressively enforced as actors doing shows, patients and their families here for medical treatments, and all manner of consultants and business people rely upon short-term rentals at less-than-hotel prices, noted Ricci.

But tourists and others who opt for services such as Airbnb are “at risk due to safety, fire and security concerns and issues,” Lisa Linden, a spokeswoman for the Hotel Association of New York City said in a prepared statement.

Pshaw, countered Ricci.

Owners and residents live in those same buildings they rent and tend to have their own have property and liability policies to cover an unexpected injury and lawsuit. In fact, after several hosts complained of guests who destroyed their property, Airbnb promised to indemnify hosts for up to $50,000 in property loss or damage.

Social networking sites such as Facebook, have greatly enhanced the ability of hosts to research the people who will be sleeping in their beds, noted Siilats, who has had no problems. Americans tend to be overly concerned with the harm strangers might do, “but I’m not suspicious,” he said.

Siilats’s apartments are in such demand he is contemplating booking a stay in another Airbnb accommodation while in New York because his own apartment is booked.

“It’s a big negative on your score if you cancel someone,” he explained.

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What’s Driving Airbnb from the Buyer’s Side

Autumn is the most difficult time to book a reasonably priced hotel room in NYC, according to John Fox, senior vice-president, PKF Consulting, a hotel advisory firm. While December 2010 rates averaged $321 a night, the average rate dropped to $202 in January. However, the prices have rebounded again this year with a vengeance, and, while rates for this fall have not yet been tabulated, are thought now to be even higher.

95,000:  Number of hotel rooms in NYC

7%: the amount hotel rooms were up the first eight months of 2011 over the same period in 2010 - and the amount they were up in 2010 over 2009

83% Average vacancy rate of NYC hotel rooms. (The national rate is in the low 60s)

$310 Average price of a hotel room in November 2010

$321 Average price of a hotel room in December 2010

Source: PKF Consulting