Short-term rental listing website Airbnb promotes itself as a simple way to rent out a spare bedroom for some extra cash, and since short-term rentals are illegal in most parts of most big cities, it bases its extensive lobbying and marketing efforts on this notion, claiming its "hosts" are just trying to scrape together a little extra cash to pay the rent, so why don't you cut them a break? But Airbnb has never actually revealed data to back this claim up, so the Los Angeles Alliance for a New Economy did it for them, putting out a thorough report yesterday on the company's massive impact on the LA housing market.
Just a handful of hot neighborhoods produce most of the Airbnb revenue in LA and rents are rising faster than average in those neighborhoods; the most significant problem is that landlords are taking whole units (sometimes rent stabilized ones) off the rental market in order to turn them into ersatz hotel rooms. And LAANE's report also found that most people profiting off of Airbnb are not regular folks making a little extra cash—they're pros, with multiple units permanently up for rent.
LAANE found 8,400 Airbnb hosts in LA with 11,401 listings; nearly two-thirds of those (64 percent) are full units, suggesting that most people using Airbnb are basically just landlords choosing to illegally rent out their spaces as short-term units instead of as regular apartments (there are probably also some people who just travel a lot).
Most of those landlords (42 percent) are only renting out one place on Airbnb, but six percent are considered "leasing companies," renting two or more places. But here's the thing: Those six percent are making 35 percent of the Airbnb revenue in LA. The 42 percent of people renting a single unit are making 54 percent of the revenue. And the 52 percent who are non-pros renting out an extra room make just 11 percent of all the Airbnb revenue in Los Angeles.
More than a third of hosts (38 percent) with only one listing (of any kind) make no money at all. Hosts with lots of listings pretty much always make money—only two percent of hosts with five or more listings made nothing. As the LAANE report summarizes, "Rather than disrupting the existing economic order, AirBnB seems to have simply reinforced that hierarchy."
LAANE also tracked down what it says is the most prolific host in Los Angeles—someone named Ghc, renting out 78 full units (when we searched just now, we found 88). Something, actually: it's a company called Global Homes and Condos, which calls itself a "full service vacation rental management company." Its owner, Sebastian de Kleer, is also the cofounder (with another professional landlord) of the Los Angeles Short Term Rental Alliance, which advocates for the rights of "professionals in the short term vacation rental industry."
But de Kleer is not the face of Ghc. Today it's represented on its Airbnb profile with a group photo, but not so long ago its public faces were "Danielle and Lexi," who, judging by their photo, were a couple of young, white gals. Airbnb confirmed this with a "verified ID" badge on their profile page. It's unclear what connection Danielle and Lexi have to Ghc, but either way the company switched to its Airbnb profile to its real identity recently.
Regardless, neither Danielle, Lexi, or Ghc is really responsible for making sure their Airbnbs are legal, or in the case something goes wrong. The owner is someone else altogether. Airbnb offers up to $1 million in "covered losses" to its hosts, but that only applies to property damage (and LAANE details one horror story where it didn't even cover that). Besides paying taxes, hotels are required to have significant insurance to cover the property and their guests; they're also required to comply with the Americans with Disabilities Act. Apartment landlords, particularly for rent stabilized units, have to follow laws governing discrimination, evictions, rent increases, and other tenant protections.
But Airbnbs aren't legal, the city can't handle enforcement on thousands of units, and so the whole scene is pretty much lawless. And that works for landlords, works for management companies, and seems to work for Airbnb, which takes a three percent commission from every host and up to 12 percent from every guest.
· AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES [LAANE]
· The Nine Neighborhoods That Make All the Airbnb Money in LA [Curbed LA]