Airbnb suffered a major defeat in Jersey City. Here’s what that means.
If you’re hoping to book a cheap stay a short train ride from the hustle and bustle of Manhattan, good luck finding an Airbnb in Jersey City..
On Tuesday, Jersey City residents voted overwhelmingly in favor of tougher short-term rental regulations that will almost certainly reduce the number of Airbnb listings in New Jersey’s second-largest city.
The new restrictions were a major defeat for Airbnb as it prepares to go public and the latest in a series of laws cities around the world have passed to regulate the explosive growth of the home-sharing industry.
Jersey City regulations have swelled over concerns that the platform’s 3,000 listings, many run by big investors, were pushing often unruly tourists into residential areas, helping to drive up prices. housing costs and to accelerate gentrification.
Airbnb said its platform is a crucial source of additional revenue for landlords who list their properties on its website and that the new restrictions were influenced by the hotel lobby.
The company collected enough signatures to trigger the referendum and spent $4.2 million to push back against the new rules, betting it could outspend its opponents on hiring political consultants and pollsters, and investing heavily in direct mail and TV spots.
“They thought their money would win and I’m proud Jersey City said otherwise,” Jersey City Mayor Steven Fulop said Tuesday. “If I were an investor in Airbnb, I would definitely take notice, because this regulatory message was not sent by politicians, but was dictated directly by the people.”
Airbnb’s opponents – the hospitality industry and an influential hospitality workers’ union – spent an estimated $1 million in what quickly became the most expensive local referendum in New Jersey history.
Jersey City, with a population of 265,000, has become an unlikely but valuable battleground for the $30 billion company as it grapples with a growing crackdown on illegal Airbnbs in neighboring New York City. , its biggest market in the country.
What do the new regulations actually do?
The new restrictions allow owners to rent out parts of their home as long as they are present during a guest’s stay.
But they ban tenants from listing their apartment and bar owners to rent a property short-term for most of the year if they don’t live on-site, banning large-scale Airbnb operators who had converted hundreds of condos and townhouses. in makeshift hotels.
However, it would hurt residents who were making extra money by renting a second home for days at a time through Airbnb.
What does this mean for Airbnb?
The new ordinance won hands down with about 70% of the vote, a sharp rebuke to a company that mounted a strong multimillion-dollar campaign and put its fate in the hands of voters after failing to forge political alliances. effective in Jersey City.
The restrictions were an abrupt about-face in Jersey City, which legalized Airbnb just a few years ago but sought to rein in the home-sharing industry as the number of listings surged. Other cities with Airbnb-friendly laws that manage growing listings could follow suit.
While more than 96,100 residents of Jersey City use Airbnb while travelinging, the defeat underscored the difficulty sharing economy companies increasingly face in engaging users as a constituency.
In New York, for example, Uber was able to rally its riders in 2015 to help defeat a proposed cap on transit vehicles, but it failed to replicate that success in 2018 when the city passed a cap. ‘a year.
Airbnb galvanized its hosts, but they were eventually outnumbered by a broad coalition of concerned neighbors and hotel-industry-backed community groups and local elected officials, including Mr. Fulop, a Democrat.
It was an off-year election, and both sides privately speculated that a higher turnout might have tipped the balance in Airbnb’s favor. Rather, the vote settled all of the regulatory uncertainties in Jersey City ahead of the company’s IPO, or IPO.
This could be inconsequential to the company’s bottom line: Airbnb once relied heavily on business in its 10 largest cities, but those cities now matter for less than 10% of its bookings as the company continues to expand into emerging destinations around the world.
“From the start of this campaign, we knew this was going to be one of the toughest fights we’ve faced, with New York’s large hospitality industry determined to fight home sharing, but we had the obligation to defend our community,” Christopher Nulty, a spokesperson for Airbnb, said in a statement.
“There are Airbnb listings in over 100,000 cities around the world and we will continue to do everything we can to support hosts,” he added.
How has Airbnb fared in other cities?
Despite legalizing home sharing in 2015, Jersey City now joins the ranks of other cities and towns that have tackled the spread of Airbnb and similar services.
Los Angeles, Amsterdam, Paris and Vancouver, British Columbia, have all passed laws restricting short-term rentals.
Denver went further: the city began filing of criminal charges against people who lie about whether their listed property is their primary residence.
Last year, Palma de Mallorca became the first city in Spain to ban Airbnb.
Airbnb has have sometimes pursued ballot measures, in which citizens can vote directly on legislation and money can play an outsized role – as he did in Jersey City.
Airbnb collected enough signatures to ward off a bill in San Diego last year.
In San Francisco, where Airbnb is based, the company orchestrated an $8 million campaign to win a vote in 2015, but the city then passed legislation requiring hosts to register with the city, which has led to a decline in listings. 50 percent drop.
What is the connection between the vote and New York’s repression?
As far as Airbnb is concerned, Jersey City has effectively become New York’s sixth borough.
The city has more listings than the Bronx and Staten Island combined, and roughly the same ratio of listings per capita as Manhattan. Many of the listings are near transit hubs that give guests quick access to Manhattan, just four minutes away by train.
Some experts say that as New York City escalated its war on illegal Airbnb operators through lawsuits and violations, Jersey City’s more loosely regulated landscape became an attractive alternative for investors.
Sixty-five hosts that control 527 listings in New York also operate about 492 listings in Jersey City, according to David Wachsmuth, a professor at McGill University who analyzed data from analytics firm AirDNA.
“There are a lot of places that look vaguely like Jersey, from small towns to the outskirts of big cities,” Mr Wachsmuth said. “If the big cities are cracking down, it’s only natural that more and more Airbnb business will go to those smaller cities.”
New York City, which has about 50,000 Airbnb listings, passed a law in 2018 requiring home-sharing sites to provide detailed monthly information about their listings, including host identities and addresses.
In January, however, a federal judge blocked the law after Airbnb and other sites filed a lawsuit. The trial is ongoing.
How are the people of Jersey City feeling?
For weeks, neighborhood meetings heated up as Jersey City residents were bombarded with a deluge of direct mail and advertisements.
Airbnb critics have argued that the company has waged a misinformation campaign under the name Keep Our Homes, calling the regulations a “ban”. Its supporters said the order was influenced by special interests in the hotel lobby and that Airbnb hosts were being harassed.
The vote was eventful until the announcement of the results.
Tuesday night, the Keep Our Homes campaign posted a video it appeared to show Mr Fulop encouraging a resident, standing by a voting booth, to vote in favor of the new restrictions. It’s illegal under state law to a candidate within 100 feet of a polling place.
“The entire video would clearly show that I did not approach anyone, that I had no documentation and that I was not an electoral candidate,” Mr. Fulop said. “They’ve been campaigning dirty the entire time and should release the entire video, not an edited four second clip followed by a press release from them.”
At the heart of residents’ frustrations were deep-rooted concerns about Airbnb’s impact on their neighborhoods.
Beyond complaints about quality of life – noise, litter and safety issues – many residents worried that Airbnb could be used to take swathes of apartments off the rental market, potentially raising rents in a city already struggling. taken with displacement pressures.
“The secret is that rents here are skyrocketing,” said Corey Klein, a real estate attorney who lives in Jersey City. “Airbnb, for every unit rented to the budget traveler, that’s one less unit available to a working family.”
The vote, he said, was “Jersey City’s way of telling big tech giants that an election can’t be bought here.”