The New York City government has been battling short-term rental service Airbnb, which has been blamed for an explosion in illegal hotels that have helped drive housing scarcity and rising rent in the city, for years. Now it’s suing Guesty, an Airbnb preferred software partner that the city believes has a business model structured around breaking the law.
The mayor’s Office of Special Enforcement (OSE) claimed in a suit on Monday that most of the New York business run by Guesty, which allows users to manage listings on multiple sites, is illegal, according to Wired. The office is also seeking an investigative subpoena that would allow it to access large amounts of Guesty business records, which Wired noted could include “names, contact information, and detailed account history for all of the company’s NYC customers.” Bloomberg noted that regulators appear to have gone out of their way to note Guesty’s claims of “full integration” with Airbnb, as well as that the firm marketed itself to landlords as freeing them from the “ball and chain” of long-term rentals.
OSE officials wrote in the suit that Guesty’s business model relied on “permanent New Yorkers displaced from the city’s fragile housing market, and unsuspecting guests steered to illegal and unsafe transient accommodations,” Bloomberg wrote. They also accused Guesty of being aware of “New York laws restricting the conversion of long-term permanent dwellings intended for ordinary New Yorkers making the city their home—the people Guesty believes are a ‘ball and chain.’”
The state of New York has been trying to root out illegal Airbnb hosts since October 2016, when it passed a law imposing steep fines on people listing entire apartments for less than 30 days and while the host isn’t present. In 2018, the City Council also voted to force the company to disclose information about hosts on a monthly basis. Airbnb filed suit over the matter, but came to an agreement with the city last year in which it would share some anonymized data about hosts, as well as de-anonymize data related to specific listings the city deems are likely to be illegal. A settlement on the suit is reportedly forthcoming.
While a legal resolution could help settle some of the disputes between Airbnb and the city, the new lawsuit against Guesty indicates that New York hardly plans on dropping the matter altogether. What Guesty does, according to Wired, is help automate the process of juggling numerous listings between various sites and host accounts—something that would obviously appeal to commercial operators flaunting the law. (Wired wrote that officials claimed in the suit that a massive illegal rental ring exposed in a high-profile January 2019 bust relied heavily on Guesty.) That same data could also, however, help unmask operators of illegal hotels to OSE.
“We know that the people who are using Guesty are engaged in taking multiple units at a time, but how many there are, how big those operations are, if there’s any connection between them—those are questions that that this action seeks to answer,” OSE executive director Christian Klossner told Wired.
According to Bloomberg, NYC increased its budget for finding listings that violate the law to $8 million for fiscal year 2020. Airbnb, which is looking to launch an initial public offering in 2020, has been valued north of $30 billion, though it recently posted financial results showing it sliding into the red to the tune of $322 million in the first nine months of 2019 as it struggled to deal with safety issues ranging from scams to murders.
Correction: 3/3/2020 at 2:25 p.m. ET: A prior version of this post referred to Guesty as a concierge service. Guesty has told Gizmodo that they are not a concierge service and instead provide software services such as property management calendar tools, unified inboxes that centralizes guest communications over multiple services, and automated guest check-ins. Additionally, they denied their business model is intended to violate the law.
“Guesty is a software solution that provides property management companies worldwide with tools that enable them to streamline and automate their business operations,” a Guesty spokesperson wrote in an email to Gizmodo. “As a tech solution to those who offer short-term rental stays, we most certainly do not advocate for circumventing local legislation in any city.”