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--:-- Sean Rameswaram: Welcome to Today Explained. I'm Sean Rameswaram.
--:-- Sean Rameswaram: At the beginning of the month, Brian Chesky, the co-founder and CEO of Airbnb, said something you don't often hear co-founders and CEOs say. He said his house was a total mess. Chesky told a Bloomberg reporter that the foundation of Airbnb was basically broken, that the site was 10 times as big than it was eight years ago, and there weren't enough pillars holding up its 7 million or so listings around the world.
--:-- Sean Rameswaram: Prices out of control, inaccurate listings, bad customer service, all this coming from the CEO. But Airbnb's problems aren't limited to its service. There have been Airbnb bans and restrictions passed all over the world, the latest in one of its biggest markets in its biggest country. New York!
--:-- Sean Rameswaram: We're going to hear how that's going, and if this beloved service can work a bit better for everyone on Today Explained. Concrete jungle where dreams are made of!
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--:-- Sean Rameswaram: This is very Sean. This is very Sean-coated. Gucci loafers. Saks says Saks makes shopping feel totally customized to you, whether that's from an in-store stylist or a visit to Saks.com. where they can show you just what you want to see.
--:-- Sean Rameswaram: They say they'll even let you know when arrivals from your favorite designers are in or when something you've been eyeing is back in stock. You can find inspiration for your personal style every day at Saks Fifth Avenue.
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--:-- Sean Rameswaram: And clear the chosen doors, please. The next stop will be Today Explained. Today Explained will be next. Stand here.
--:-- Sean Rameswaram: According to the CEO of Airbnb, New York City accounted for roughly 80% of its business around 2010. Compare that to 2023, when New York City just last month placed a severe restriction on short-term rentals decimating Airbnb's business there.
--:-- Sean Rameswaram: Amanda Hoover has been on the Airbnb for Wired. We asked her how New Yorkers are feeling about their new law.
--:-- Amanda Hoover: It's a mixed bag. Airbnb hosts are very upset. They view this as something that is taking away a source of revenue. Some of these people, you know, aren't necessarily big landlords, but have one unit they rent out or rent out their place while they're away, and they're no longer able to do that.
--:-- Amanda Hoover: I'm very concerned about being able to afford our home and our expenses without the short-term rental. I really want to be able to support our family. This is putting me between a rock and a hard place.
--:-- Amanda Hoover: You have housing advocates that are saying that this is something that could free up more housing stock and help to compete with some of the really high rents that are creating housing shortages.
--:-- Amanda Hoover: Commercial operators who take thousands of units off the market that should be going to permanent New York residents and turn them into rooms for tourists who are here one or two nights that has to end because it has encroached on our supply of affordable housing, which is diminishing daily.
--:-- Sean Rameswaram: Take us back a little bit to why New York City is doing this. Yeah, they're doing this, you know, for the same reason that housing advocates are interested in this. Rents are very high in New York. Getting apartments is very competitive.
--:-- Sean Rameswaram: We actually offered six months in advance, $24,000. Despite offering that, we got rejected. We found out the competing bid was a person who offered to lease all five, six units. And they're turning it into Airbnb rentals.
--:-- Sean Rameswaram: There were tens of thousands of short-term rentals that, in theory, people could live in full-time. And that would make it, in theory, a bit easier maybe to find an apartment. That's the city's stance in limiting it.
--:-- Sean Rameswaram: As well, though, short-term rentals tend to bring noise and trash and even parties and potential danger to residential areas. So there's a bit of pushback on that end as well. And we see that around the country.
--:-- Sean Rameswaram: That time I had to go break up a party at my Airbnb in the middle of the night while I was eight months pregnant with twins. And who's Jeffrey? Where's Jeffrey? Get out! Everyone get out!
--:-- Sean Rameswaram: And there's another piece of this. You know, some people are engaging in what they call Airbnb arbitrage, which they aren't the homeowners. These are people who lease units from landlords with an agreement or maybe sometimes without an agreement that they'll then be listing it on places like Airbnb.
--:-- Sean Rameswaram: And they act then as the property manager. They furnish it. You see a lot of these very bland styled apartments that just look like IKEA showrooms. But you can charge so much more per night generally with a short term rental than you can with a long term lease.
--:-- Sean Rameswaram: If you're in your 20s or 30s and not making at least $10,000 a month, stop scrolling. I had heard about rental arbitrage and decided to give it a try.
--:-- Sean Rameswaram: At 20 years old, how did you even get all these Airbnbs? What's the deal? So we use the arbitrage method where we, you know, contact a landlord or like a property.
--:-- Sean Rameswaram: So then they profit and then they go and take that money and, you know, get another lease. So some of these people do this with tens or dozens of places. You know, people claim to make tens of thousand dollars a month in revenue doing this.
--:-- Sean Rameswaram: I'm going to show you how I made a million dollars with rental arbitrage. Part three of making $65,359 a month from Airbnb arbitrage.
--:-- Sean Rameswaram: When did New York first get savvy to all this Airbnb arbitrage? The latest rule isn't necessarily aimed only at Airbnb arbitrage, but the city and Airbnb have for a couple of years gone back and forth.
--:-- Sean Rameswaram: More recently is this registration law. You know, there are older laws on the books the city say prevent short-term renting. It's just been very unenforceable ever since Airbnb became such a massive presence
--:-- Sean Rameswaram: In 2022, they passed this Local Law 18, which requires Airbnb hosts or short-term rental hosts to register with the city. To get that registration though you cannot be listing entire apartments You have to be listing a room in your home where you also will be home at the time that the guest is there You can list you know for a maximum of two guests.
--:-- Sean Rameswaram: So that cuts out a big piece of the market. There's no more entire apartment rentals. And a lot of people, you know, we're really doing that as opposed to a hotel. You have a much smaller group of people that are willing to share a home with somebody.
--:-- Sean Rameswaram: We're in New York City. Everything is super small. And the rules don't really make sense. If they're saying that I have to share my apartment and they have access to every room in my house and I have to have access to theirs, I'm not sure of too many travelers that are going to feel comfortable with that.
--:-- Sean Rameswaram: And then there was some delays in enforcement. But starting on September 5th is when the city began working to verify that properties that were listed are registered.
--:-- Sean Rameswaram: So it's been like a month and a half since New York City started enforcing this law. Do you know how it's going so far? What we know, what we see as we look around is that there are people moving to different platforms that are still looking to do these whole unit short-term rentals.
--:-- Sean Rameswaram: I found many on Facebook Marketplace and different Facebook housing groups that are for short-term rentals, sublets, things like that. I've also found some of these on Craigslist where the Craigslist description says like this is an Airbnb, you know, still using that language that people so associate with short-term rentals.
--:-- Sean Rameswaram: There's also another website called Howfee, where tons of hosts have signed up in the past couple of weeks. You know, you see a lot of people based in New York City that says they started in September or October.
--:-- Sean Rameswaram: And this is more of a peer-to-peer housing platform where people would pay directly. So it kind of skirts that booking platform accountability that this law meant to enact.
--:-- Sean Rameswaram: So it's really hard to say, like, how many people in total are doing this. I've found definitely like dozens are still doing this through these other outlets that are not formal short-term rental platforms like Airbnb or VRBO.
--:-- Sean Rameswaram: How does New York feel that people are just scrambling to other sites to continue to violate the spirit or maybe even the letter of their law? And then how do sites like Facebook, Craigslist, or Halfie, which I'm just now discovering exists, feel about people coming to their sites to now flout this law?
--:-- Sean Rameswaram: When I was writing a story about that, you know, I didn't get comment from the city. They didn't have a response for me to include.
--:-- Sean Rameswaram: I did speak with Halfie, as I've reported, you know, they kind of maintained that because they aren't processing payments, you know, they aren't subject to some of these regulations, but still say that they're working with the city to try to follow the law and see how the regulations fit into their platform.
--:-- Sean Rameswaram: But a lot of these are very hard to police. You know, it's pretty hard to catch a line in a post in a Facebook group that's private. I've seen people that just are posting saying, I'm looking for a weekend in November, like in this neighborhood who has something.
--:-- Sean Rameswaram: That's a lot harder to track than an Airbnb listing. It sounds like, Amanda, from your telling of it, that New York's kind of having to like reinvent the wheel here in terms of thinking about how to enforce this law and how to actually achieve the ends it's seeking here.
--:-- Sean Rameswaram: But other cities have tried this, right? Many cities have tried some version of regulating short-term rentals. Sometimes it's a registration. Sometimes it's a ban on the number of nights per year you can list an entire apartment.
--:-- Sean Rameswaram: Here in the capital, hosts are usually restricted to hiring out their properties for 90 nights a year. Sometimes it's, you know, certain zones. If they are zoned residential, they're trying to ban short-term rentals from coming to that part of cities and keep them more in places where tourism is popular.
--:-- Sean Rameswaram: Dallas City staff told council members today that defining short-term rentals, like those listed on Airbnb and Vrbo, as lodging would eliminate about 95% of the rentals operating in the city.
--:-- Sean Rameswaram: That would make them illegal in residential neighborhoods, but legal in these commercial areas colored pink. It's a constant fight and it's really creating like a patchwork of rules for the platforms to be dealing with and for hosts and guests as well.
--:-- Sean Rameswaram: They can see very different offerings, you know, depending what city they're searching in. And this kind of brings us back to the reason Airbnb was such a success in the first place.
--:-- Sean Rameswaram: Cities like New York City are incredibly expensive to stay in. If you can even find a hotel you can afford. And if that hotel's not on the high end, it's gonna suck.
--:-- Sean Rameswaram: The very producer of this episode, Siona Petros, became aware of this short-term rental ban because she and a friend were traveling to New York and they couldn't find an Airbnb anywhere.
--:-- Sean Rameswaram: So they ended up paying nearly a grand for an overpriced hotel. Yeah, I don't know what's worse. The fact that we actually paid that much money or the fact that that was the cheapest option that we could find.
--:-- Sean Rameswaram: Still don't know how I feel about it, but it was a good weekend though at least. I know the chief concerns here are with New Yorkers but how is this gonna affect thousands upon thousands if not, I don't know, millions of people who visit that city every year?
--:-- Sean Rameswaram: Yeah, it's definitely maybe a deterrent for some people. If people had trips booked past December 1st on Airbnb they might be dealing with their trip being canceled now if that place hasn't registered and doesn't comply with these rules.
--:-- Sean Rameswaram: Hotel prices may even go up. Some analysts have been saying recently because there's going to be increased demand back on hotels.
--:-- Sean Rameswaram: So it's going to be a bit trickier if people navigate. And if you're coming here with a family, you know, with children, a lot of people have found it's much more pleasant to stay in a neighborhood and in an Airbnb where you have a washer and a kitchen, things that you don't generally get in hotels.
--:-- Sean Rameswaram: So there are still ways you can like rent homes like that, but they might be a bit more expensive and you might have to do it for a bit longer. So it does most immediately, I think, affect visitors and hosts as well.
--:-- Sean Rameswaram: What this might do for the housing market is a little bit less clear. It's a city of 8 million people and we're talking about housing units in the thousands. So it's not like immediately all the rent in New York is going to drop because of this.
--:-- Sean Rameswaram: That was Amanda Hoover from Wired. Read her at wired.com.
--:-- Sean Rameswaram: When we're back on Today Explained, why even without an Airbnb ban or restriction hotels are looking a lot better to a lot of people these days.
--:-- Sean Rameswaram: I lived in and grew up in the Hudson Valley of New York State my whole life and Airbnb has completely ruined the economy up here.
--:-- Sean Rameswaram: During the summer and weekends, I feel like a stranger in my own home town. It's getting out of hand.
--:-- Sean Rameswaram: I rent my home while I'm working out of state, And I rent it out at a very reasonable rate to people who are working in the service industry.
--:-- Sean Rameswaram: I'm completely in favor of a ban or restrictions on Airbnbs and the like, because I think they're a huge contributor to the housing shortage in this country.
--:-- Sean Rameswaram: Airbnb is great if you've got a big group of people looking to stay in one house together. Airbnb is not the answer when you and one or two other people or looking for a cheap alternative to a hotel room. Just get a hotel.
--:-- Sean Rameswaram: Love the show. Support for Today Explained comes from Built Rewards.
--:-- Sean Rameswaram: These days, it seems like everybody has a rewards program. You swipe your card and you get one cent on the $100. But with your rent, frequently, you just pay month after month. You never get anything from it other than that roof over your head.
--:-- Sean Rameswaram: Not anymore, says Built Rewards. Built Rewards says it lets you earn points on your rent. By paying rent through Built, they say you can earn flexible points that can be redeemed toward hundreds of hotels and airlines, perhaps a future rent payment, your next Lyft ride, and so much more.
--:-- Sean Rameswaram: Your home isn't just where you sleep. It's your community. And Built wants you to go out and do things in the community. You can eat at your favorite local restaurants, then earn more points. You can get VIP treatment at certain fitness studios. You can enjoy exclusive experiences just for Built members every month.
--:-- Sean Rameswaram: When you're ready to travel, they say Built points can be converted to miles or hotel points all around the world. You can earn points on rent and around your neighborhood wherever you call home by joining Built.com slash Explained.
--:-- Sean Rameswaram: That's J-O-I-N-B-I-L-T dot com slash Explained.
--:-- Sean Rameswaram: Not all journalism is the same. Take The Guardian. Our coverage has something unique. Fierce independence. Nobody owns us or tells us what we can and can't say.
--:-- Sean Rameswaram: So we're free to report the whole picture. We connect what's happening in Washington to the rest of the globe. Expose corruption wherever we find it. And give fresh perspective on everything.
--:-- Sean Rameswaram: From wellness and soccer to culture, the climate and more. Read, watch, and listen to The Guardian for free at theguardian.com
--:-- Sean Rameswaram: I got like wrestled awake by my partner like, don't freak out, don't freak out, don't freak out, don't freak out So I had to kind of like put my hand over my mouth and wake up and see Oh my gosh, this man is in this bed with my partner and me
--:-- Sean Rameswaram: The man who owned the house who rented it to us in Airbnb
--:-- Sean Rameswaram: Today Explained is back and we're joined by Kate Lindsay, who recently wrote a piece for The Atlantic titled Airbnb Really Is Difference Now.
--:-- Kate Lindsay: So in 2007 in San Francisco, the founders of Airbnb kind of had this idea that during these big ticket events like political conventions, they could step in when hotels would kind of quickly sell out of rooms or the prices would be too high.
--:-- Kate Lindsay: That summer, everybody was talking about the Democratic National Convention, which is going to be held in August 2008 in Denver. It's where Barack Obama was going to receive the Democratic Party's nomination for presidency.
--:-- Kate Lindsay: So what the founders did was they were like, we're literally just going to put a few mattresses on the floor of our apartment. We'll also provide breakfast and we'll like charge for that.
--:-- Kate Lindsay: They had upgraded the venue to the stadium that holds 80,000 people. And while we looked up in Denver, there's only 17,000 hotel rooms. So we knew right away there was going to be a problem, that there's going to be a need for alternatives.
--:-- Kate Lindsay: It blossomed from there in terms of like, if you're someone who has a spare room or even a couch or an apartment over your garage, You know, this space in your home, they kind of realized this is untapped money.
--:-- Kate Lindsay: You could be making money off of it. And so we rushed to build this website in three months. And again, we launched it two weeks before the event.
--:-- Kate Lindsay: We were lucky. There are a lot of locals who are looking to get out of town and make some money. And so within the first week, we got 800 people to put up their properties on our website.
--:-- Kate Lindsay: I was actually an Airbnb host for several years. I would say my experience was overwhelmingly positive, and it really helped me pay the rent on a very expensive house that I really couldn't afford.
--:-- Kate Lindsay: It was just like couchsurfing.com, but for money. Right. And so it kind of, you know, it solved two problems. It gave hosts sort of easy way to make extra money without changing too much about their lifestyle.
--:-- Kate Lindsay: And then guests also could get a cheaper room. And then sort of as Airbnb firmed itself up, it really kind of became, you know, not only do you get this room, but also you get sort of a host who literally lives there and can give you recommendations.
--:-- Kate Lindsay: It was very much sort of a personal experience, very much an alternative to hotels. I stayed at an Airbnb in Washington, D.C., multiple times because I come there every year and loved staying with the same family again and again.
--:-- Kate Lindsay: And we would go out for drinks and dinner or sometimes we would get wine at home and they would cook dinner. So it was just a spectacular experience.
--:-- Kate Lindsay: So I started learning Polish two years ago. This summer, I had a long immersive stay there for over a month. My experience was incredible and Airbnb was a key part of that because it put me right into the middle of regular life there.
--:-- Kate Lindsay: And I really got a great feel for what it's like to live in Poland. So what happens is Airbnb is a marketplace. And so the way it started was a lot of just regular people saw the original conceit and followed it to the letter.
--:-- Kate Lindsay: They were like, oh, here's my room. Here's my couch. Here's sort of this apartment over my garage. It did well and obviously like really quickly kind of blew up.
--:-- Kate Lindsay: But you know anytime something like that happens it becomes successful Anyone else with more resources can come in and use the platform in the same way but take advantage of it In tech companies the way that they were funded you know they can just do well and stay the same.
--:-- Kate Lindsay: They have to keep growing. And so in the case of Airbnb, that kind of has just meant slowly over time, they've just started to grow in the same direction as the hotel industry, which is what they were trying to replace.
--:-- Kate Lindsay: I think a big way that this sort of started to move in a more commercialized direction is people who had second homes or vacation homes, things like that, they realized, oh, I can rent that on the platform.
--:-- Kate Lindsay: And so it's not just a room and it's an entire home, which like full disclosure is usually always what I opt for when I use Airbnb. So it's not that it's a bad thing, but it's not Airbnb's original conceit.
--:-- Kate Lindsay: You know, the host isn't there. It goes from a host kind of welcoming you in, showing you around, giving recommendations to, you know, key this into the lockbox to get the key.
--:-- Kate Lindsay: The recommendations are on the table. It's very impersonal. I got in this little room. It was summertime here in Florida. The AC didn't come in there. The room was over 90 degrees. The fan didn't work. There were cockroaches, ants, and there was a fly in the room.
--:-- Kate Lindsay: We walk in the Airbnb and we did notice that there were cameras throughout the entire house, not just by the door like was disclosed in the listing. The place was just trashed. It was so gross, but there was nowhere else, so we stuck it out.
--:-- Kate Lindsay: Later that night, the host starts messaging me saying that I was going to be kicked out immediately. She also said she was going to send her brother-in-law to come check on us and kick us
--:-- Kate Lindsay: Now, since then, I have never used Airbnb again. Now, it's so normal to whatever it is, the sort of price I'm looking for, tack at least 100 extra dollars on top of it.
--:-- Kate Lindsay: It used to be less common because hosts were, you know, just running out of room. They would clean themselves. But now that it's become common to do whole properties or that the whole, you know, industry has become so commercialized, I don't think I've seen a listing without a cleaning fee in years.
--:-- Kate Lindsay: But you have seen listings where they ask you to clean before the cleaner shows up. Pretty much all of them. The issue with that is that the cleaning fee number is kind of arbitrary at this point.
--:-- Kate Lindsay: Like, obviously, there are many hosts that are pricing it accurately because they do use the cleaning service. But, you know, I spoke to a spokesperson at NerdWallet who had been involved in a study, sort of talking to hosts.
--:-- Kate Lindsay: And in many cases, the cleaning fee is there to kind of offset any discounts on the daily rate. So what will happen is in order to compete with these places that have more resources so they can list their properties for less money.
--:-- Kate Lindsay: These regular hosts are also listing their properties for less money so they can compete in the search. And then they'll make up the difference by increasing the cleaning fee because there doesn't seem to really be any proof that they have to provide of how much the cleaning costs.
--:-- Kate Lindsay: It's just a number they can set. And so I think that has just contributed to this larger confusion, frustration with cleaning fees because they feel arbitrary.
--:-- Kate Lindsay: They are somewhat arbitrary and you have to clean anyways. So if Airbnb is just a hotel now, I feel like they should just incorporate their cleaning fees into the actual price and people will be a lot less mad about the sticker shock.
--:-- Kate Lindsay: Right. And so one thing they have done to kind of address this problem is there's a new toggle. When you search, there's now an option to just show total price and it includes the fees.
--:-- Kate Lindsay: That's kind of one way to get around it if you want to get the full picture. But, you know, I think in general, if Airbnb is going to be more like hotels, things like the cleaning service of hotels, those are staff.
--:-- Kate Lindsay: Many of them are in unions or they have wage requirements. They have hours, things like that. It's just ironic, really, because it's just if it wants to sort of solve these problems, it's going to have to accept that Airbnb is just kind of a different hotel platform.
--:-- Sean Rameswaram: Where does this leave us? Because Airbnb is still wildly popular, but in some cities they're trying to restrict it. But I guess in other cities, it's still just the Wild West of short-term rentals.
--:-- Sean Rameswaram: Is Airbnb ever going to like self-regulate to just say, here's a new policy that'll fix this problem?
--:-- Kate Lindsay: Yeah, so Airbnb does seem to be making some efforts to kind of go back to its original vibe. They introduced something which is, you know, kind of a rebranding of their original concept just called Airbnb Rooms.
--:-- Kate Lindsay: The whole point is you're booking a room in someone's larger home. You get provided like a little booklet on that host. It's really meant to foster sort of a relationship going back to that, the unique way Airbnb first started.
--:-- Kate Lindsay: It's one of those things where it's like it's going to be hard to put the worm back in the cans because so many of these property owners and management companies have figured out a way to make a decent living off of just kind of renting out properties.
--:-- Sean Rameswaram: Externally, I just think we're going to see a lot more regulation and hopefully a little bit more unified regulation so we're not just having wildly different specific rules for each city, not even each state, each city.
--:-- Sean Rameswaram: And it'll start to be something that is a bit more consistent, which ironically is exactly what kind of happened to the hotel industry.
--:-- Sean Rameswaram: That was Kate Lindsay. She writes an internet culture newsletter called Embedded. You can find it at embedded.substack.com.
--:-- Sean Rameswaram: Our program today was produced by Siona Petros. She had help from Amina Alsadi, Matthew Collette, Laura Bullard, Serena Solon, Tian Nguyen, Patrick Boyd, David Herman, and you.
--:-- Sean Rameswaram: Thank you for calling in with your Airbnb stories. I'm Sean Rameswaram from the rest of the Today Explained team includes my co-host, Noelle King, duh.
--:-- Sean Rameswaram: But also our executive producer Miranda Kennedy, Hadi Mawagdi, Amanda Llewellyn, Isabel Angel, John Ahrens, Abishai Artsy, Victoria Chamberlain, Miles Bryan, Rob Byers, and Halima Shah, who is somehow only turning 30 today.
--:-- Sean Rameswaram: Happy birthday, Halima. We use music by Breakmaster Cylinder in a totally non-exclusive way.
--:-- Sean Rameswaram: Today Explained is distributed by WNYC. The show is a part of Vox, which is totally free.
--:-- Sean Rameswaram: Thanks in part to contributions from our listeners. Join us at vox.com slash give. Bye.
