The new ruling by New York State not to allow rental of homes for periods under 30 days has created a ripple effect across the globe. In what is shaping up as a landmark legal case of the shared economy versus the hotel industry, Airbnb has filed a counter suit in the US Federal Court.
According to the New York Time Airbnb had in drove USD1 billion in revenue for New York City property owners last year. This has helped propel the internet giant to a current valuation of USD30 billion. Now the question comes up, where is the value headed, up or down?
In San Francisco Airbnb is fighting another legal case which is taking a right of free speech approach for 3rd party provider in terms of providing content but not accepting the legal ramifications of local restrictions on non-licensed accommodation.
Penalties in New York for illegal rentals under the new law can be up to USD7,500.00 to homeowners. Another front has been in condominium projects or apartments which are protesting having travelers use facilities in their residential complex. To cut it short, it’s complicated and there are more issues evolving at every turn.
Taking a real estate spin, the knock on effect for owners of prime properties in urban properties could see a potential drop in yields given the shorter term Airbnb returns are higher than long-term yields. For now though homeowners have turned from passive property players to active online hosts. The shared digital economy is a fast to market approach that pays off in short order.
The world is now watching New York but the question for many is, can a middle ground be found or how to institutionalize the shared economy? There has to be the way to unlock the value of Airbnb or will the old ways prevail? For now only time will tell, but most certainly the battle is on.