The days of home rental service Airbnb’s seeming-ubiquity in New York City may be over.

Over 70 percent of the San Francisco-based company’s New York rentals have violated zoning and other laws, according to a report by New York State Attorney General Eric T. Schneiderman released Thursday. Instead of residents hoping to earn “just a little extra money to help make ends meet,” as Airbnb’s promotional material states, commercial operators have been stepping in--accounting for almost 40 percent of both the company’s New York units and revenue in 2013. In total, these “illegal hostels” have accounted for nearly $40 million of Airbnb’s revenue over the past several years.

The report clarified: “New York law does not permit commercial enterprises to operate hostels, where multiple, unrelated guests share tight quarters. In 2013, approximately 200 units in New York City were booked as private short-term rentals for more than 365 nights during the year. This indicates that multiple transients shared the same listing on the same night, as they would in an illegal hostel.”

Airbnb spokesman Nick Papas cited New York housing laws as particularly complex. “Every single home, apartment, co-op and living space in New York is subject to a myriad of rules, so it’s impossible to make this kind of blanket statement,” he stated. “That kind of uncertainty and lack of clarity is exactly why we’re advocating for clear, fair rules for home sharing.”

The response from the privately owned and operated company seems rather non-confrontational--the New York Times speculates Airbnb may be looking to avoid a fight amidst efforts to form a public offering within the next few years. A recent fund-raising effort in April 2014 left the company’s valuation at approximately $10 billion.

Schneiderman, who plans to work with city regulators to shut down the units in question, also released a statement. “Anyone operating an illegal hotel should be on notice that the state and city will take aggressive enforcement actions in this area,” he said. “A slick advertising campaign doesn’t change the fact that this is illegal activity.”

Published on: Oct 16, 2014