New York’s Short-Term Rental Rules Fuel Shadow Market of ‘Airbnb Alternatives’

The Craiglist listing for a “charming 1-bedroom” in New York City’s East Village captured the moment, calling the short-term rental an “Airbnb alternative.”

Under the city’s host registration requirements that kicked into gear September 5, platforms such as Airbnb, Expedia/Vrbo and Booking.com were to remove listings that violated the rules or face stiff fines.

The East Village listing seems in violation because the host would need to be registered with the city and must be present for reservations of fewer than 30 days.

And yet: “This listing is my actual home that I rent when travelling and all are welcome to stay!” the host wrote on Craigslist. “I take pride in offering a clean comfortable place for my guests.”

An article in Wired this week characterized New York City’s Airbnb ban as “pure chaos.”

With fewer than 500 hosts now registered out of the 22,000 listings on Airbnb last summer, according to Wired, hosts are going underground.

“Short Term Rentals aren’t going away, they are now just happening underground in an unsafe and uncontrolled environment for both hosts and guests,” said Lisa Grossman, a spokesperson for RHOAR (Restore Homeowner Autonomy & Rights). “Craigslist, Facebook etc. So much for NYC touting that LL18 (Local Law 18) would make things ‘safer’ for visitors.”

Here are a few takeaways:

• There is too much demand for this short-term rental market to disappear; hosts and guests will find ways to connect, although the volume of rentals will likely diminish.
• The New York City hotel industry, a strong lobby, will benefit: In October 2023, the average daily rate for a standard double room in a city hotel rose 7.92% to $502, according to Trivago.
• Short-term rental hosts for years have aspired to attract direct bookings to reduce their dependence on major platforms and the substantial commissions they command. The New York City ban on whole home and apartment short-term rentals for fewer than 30 days will drive those direct bookings by any means necessary. That will mean a surge of illegal listings, and fewer protections for guests and hosts, both of whom won’t have a third party to intervene when disputes arise. Scams are likely to increase, as well.
• To the extent that the toughened enforcement will limit short-term rentals, neighborhoods may get some relief from house parties, noise, and other disruptions from unlimited short-term rentals. Still, in a locale such as New York City, we’ll have to await the data to see if rental and housing prices get impacted.
• Despite the fact that would-be New York City visitors can find legal listings in places such as New Jersey and Long Island, New York, many tourists on a budget will have to skip Manhattan.