The Washington PostDemocracy Dies in Darkness

Hotel CEO openly celebrates higher prices after anti-Airbnb law passes

Photographer: Andrew Harrer/Bloomberg

A hotel executive said a recently-passed New York law cracking down on Airbnb hosts will enable the company to raise prices for New York City hotel rooms, according to the transcript of the executive's words on a call with shareholders last week.

The law, signed by New York's Governor Andrew Cuomo on Friday, slaps anyone who lists their apartment on a short-term rental site with a fine up to $7,500. It "should be a big boost in the arm for the business," Mike Barnello, chief executive of the hotel chain LaSalle Hotel Properties, said of the law last Thursday, "certainly in terms of the pricing.”

Barnello's comment adds fuel the argument, made repeatedly by Airbnb and its proponents, that a law that was passed in the name of affordable housing also allows established hotels to raises prices for consumers. It was included in a memo written by Airbnb's head of global policy, Chris Lehane, to the Internet Association, a tech trade group, reviewed by the Washington Post. LaSalle, a Bethesda, MD-based chain, owns hotels around the country, including New York City.

LaSalle did not respond to repeated requests for comment.

"They say a gaffe is unintentionally saying what you really believe - and the latest gaffe from the hotel cartel makes it clear that the New York bill was all about protecting the hotel industry's bottom line,” said Airbnb’s public affairs director, Nick Papas. "Albany back-room dealing rewarded the price-gouging hotel industry and middle class families will pay the price."

The memo is the latest volley in a bitter fight that has pit the hotel industry, unions, and affordable housing advocates against Airbnb and its supporters. At the heart of the fight is a debate over the societal value of the Airbnb platform and its role in the economy of cities throughout the world. The question is whether Airbnb has been a net benefit, by enabling middle class city-dwellers to make extra money by renting out their homes, or whether it has had the unintended consequence of exacerbating affordable housing crises in expensive cities such as New York and Los Angeles.

Proponents of the New York law believe that Airbnb has hurt New Yorkers by taking too many rental properties off the market. Liz Krueger, the state senator who sponsored the bill, described it as "a huge victory for regular New Yorkers over the internets of a $30 billion corporation," referencing Airbnb's private valuation by venture capitalists in a statement.

"For too long companies like Airbnb have encouraged illegal activity that takes housing off the market and makes our affordability crisis worse," she said.

A 2015 report by two New York affordable housing non-profits found that Airbnb hosts who rented out their entire apartments for at least three months of the year took roughly 10 percent of the city's available rental units off the market.

Renting out an entire apartment for less than 30 days has been illegal under New York law for the last six years, but the rules were not enforced until very recently (Renting out a single room is legal). The new law, which was the subject of bitter lobbying on both sides, creates significant penalties, by fining anyone who advertises an entire apartment on a short-term basis. Airbnb is fighting the law in court.

It's not the first time that hoteliers have complained that Airbnb is hurting their bottom line. On an earnings call last year, Jon Bortz, chief executive of Pebblebrook Hotel Trust, which owns Embassy Suites, Doubletree and other hotels, said that Airbnb has put a dent on the company's "ability to price at what maybe the customer would describe as sort of gouging rates."