Airbnb has inked a deal with a major New York real estate developer, RXR Realty, to create a “new category of urban lodging” in commercial properties like a tower on Rockefeller Plaza, CNBC reported on Sunday.
In what CNBC dubbed Airbnb’s “biggest move yet into the traditional hotel space,” the company will be converting 10 upper floors of 75 Rockefeller Plaza (sorry, no 30 Rock) into apartment-style rentals with features like living rooms and kitchens. It’s also exploring other deals with RXR, including a development project the latter company is working on near the Brooklyn Navy Yard. This is the first time Airbnb has collaborated on hotel-like units, CNBC wrote:
In a press release, the two companies say they will collaborate on design and services. RXR will be responsible for the execution and management of the locations, while the Airbnb platform will be used to market and book rooms. A third-party operator will manage daily operations.
The release says that the RXR/Airbnb project will be in compliance with union and operating regulations, including that of the New York Hotel Trades Council.
No word as to how much it will set one back to book one of these rentals, but rest assured that you, personally, will almost certainly not be able to afford it.
According to the Wall Street Journal, the project appears to be in part a shift to other sources of revenue as Airbnb’s short-term rental business—the service that fueled its explosive growth—faces major pressure from local governments that accuse it of enabling a sprawling black market in illegal hotels, violating local housing regulations, and driving up rent by taking housing units off the market to cater to tourists and other visitors. In New York, it is illegal in most buildings for apartments to be listed for less than 30 days without a permanent tenant being home at the same time, and city regulators have been increasingly aggressive about cracking down on some of the biggest alleged offenders. The city has also been waging a legal battle to force Airbnb to hand over “user and listing data on approximately 20,000 apartment listings,” per HousingWire.
Airbnb is preparing for an initial public offering sometime soon, and the Journal noted it is under pressure to show it can diversify its business:
Faced with such reactions in numerous cities, Airbnb has begun to shift its strategy, trying to become more involved in the design and operation of short-term rental apartments. A venture of Airbnb and real-estate developer Niido has opened an Airbnb-branded lodging in Kissimmee, Fla., and one in Nashville. Niido said it is planning many others.
These are part of the company’s broader effort to diversify its business as it prepares for an initial public offering of shares, expected next year.