New York considers law against illegal hotel advertisements

New York City is not alone in its fight to discourage the establishment of illegal hotels, but in terms of legislation it could be considered the epicenter of the conflict. 

After announcing earlier this year that it would be investing $10 million into battling these illegal properties over the next three years, no one was particularly certain what the result would be – especially considering how the city has fared in the past. However, new legislation is coming from the state level to hit illegal operators right in the wallet by attacking advertisements.

The New York Daily News reported that New York state legislators are preparing a bill that would hold proprietors of alternative lodging sites, such as Airbnb and Homeaway, to a 2010 state law that prohibits advertising units from to be rented for less than 30 days. The punishments include high fines, and seeks to go after the main methods of securing bookings for these sites such as newspapers, magazines, TV, fliers and direct mail.

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Under the bill, landlords will be able to warn tenants against short-term renting in their leases, under threat of eviction. This could be what potentially turns the tide in Airbnb's booking numbers in the city, with State Attorney General Eric Schneiderman estimating that 72 percent of Airbnb rentals in New York City are illegal (though Airbnb estimates that number is much lower in reality).

"What this bill is targeting is people or companies with multiple listings," Linda Rosenthal (D-Manhattan), told the New York Daily News. "There are so many units held by commercial operators, not individual tenants. They are bad actors who horde multiple units, driving up the cost of housing around them and across the city."

But while Airbnb and its ilk are facing constant opposition in major markets – from measures taken to have them begin paying taxes or comply with local and state codes for safety – alternative lodging continues to thrive. FastCompany even reported that some boutique hotels in New York are now listing their rooms on Airbnb. The service's 3-percent booking fee for hosts is much less than the 10 to 25 percent charged by large OTAs such as Expedia, making it an attractive prospect with few downsides.

"Any hotel that needs to fill rooms, I don’t understand why they wouldn’t need to use it as one of their marketing arms," Stephan Westman, a hotel industry consultant, told Fast Company.