International travelers arrive at John F Kennedy international airport in New York City, February 4, 2017. Reuters / Brendan McDermid
New York City is suing a startup that provides concierge services for listings on Airbnb Inc. and other home-sharing sites, saying its business model is focused on helping people flout laws against short-term rentals.
The city filed suit against Guesty Inc. on Monday in state court in Manhattan, seeking records and testimony as part of an investigation of illegal short-term rentals in New York. Filed by the mayor’s office of special enforcement, the suit says the information is needed to determine the impact of Guesty’s business on New York’s housing market and neighborhoods.
Founded in 2013 and backed by startup incubator Y-Combinator, Guesty attracted $60 million in funding as of March 2019. The Tel Aviv-based company’s platform allows users to manage listings on multiple sites including Airbnb, Booking.com, and Expedia.com’s Homeaway and provides services like cleaning and key handovers. In its lawsuit, the city took particular note of Guesty’s claim of "full integration” with Airbnb’s site.
Guesty had no immediate comment on the lawsuit.
Supported by the city’s powerful hotel workers’ union, Mayor Bill De Blasio has been locked in a years-long battle with Airbnb. City officials estimate that as many as two-thirds of Airbnb’s listings in New York could violate laws against short-term rentals. The city has boosted its budget to hunt down these listings to about $8 million this year -- a tenfold increase in just four years.
Read More: Airbnb to America’s Big Cities: See You in Court
Noting that Guesty had in its marketing referred to long-term tenants as a "ball and chain” hobbling landlords, the city said the startup’s business appeared to come at the expense of "permanent New Yorkers displaced from the city’s fragile housing market, and unsuspecting guests steered to illegal and unsafe transient accommodations.”
Last year, New York introduced a new law that would force Airbnb and HomeAway to hand over the names, addresses and telephone numbers of their hosts. The companies sued to protect their hosts, claiming the city’s law violated privacy. The home-share companies won a temporary injunction while the case winds its way through the courts and are now in negotiation talks with the city to resolve the lawsuit.
A successful agreement in New York would pave the way for a smoother stock listing for San Francisco-based Airbnb, which has said its plans to go public this year and was last privately valued at $31 billion.
