The Failure to Regulate Airbnb

Abstract

The rapid global explosion in short-term rentals has left cities, armed only with policies related to hotels and permanent housing, scrambling. An analysis of Airbnb’s data-hoarding practices help identify the mechanisms underlying more and less effective regulatory responses in two American cities.

Headlines this year announced "The End of Airbnb in New York City." The flurry of news articles came in response to New York City’s decision to tighten its enforcement of short-term rental regulations in the context of the affordable housing crisis. Official New York City estimates suggested there were up to 10,800 illegal listings on the Airbnb platform, while other independent watchers put this number closer to 35,000. Although removing tens of thousands of short-term rentals from the market in one fell swoop may seem extreme, the frustration motivating this decision had been building among city officials for years—in New York City and beyond.

This dramatic turn of events was a response to a practice I call data hoarding, which impacts cities globally. Here’s how it works: Airbnb withholds crucial data, such as information about who posts a property to rent, at what price, and for how many nights. This makes it nearly impossible for cities to monitor Airbnb’s activity or write clear regulations, let alone enforce them. In Airbnb’s early days, the company’s resistance to sharing data posed such a challenge to city regulators that for-profit organizations, like HostCompliance, and non-profit watchdog organizations, like InsideAirbnb, emerged to fill the data void. They scraped data from Airbnb and then either sold or shared it with cities, a practice that cities have relied on to enforce regulations.

In this essay, I describe how two cities, Portland, Oregon, and Denver, Colorado, have responded to Airbnb’s data hoarding and relied on outside organizations to enforce compliance with city regulations. I characterize Portland’s actions as the partnership approach and Denver’s as the punitive approach. In taking these different approaches, the two cities—which share many characteristics and started with similar short-term rental regulations—ended up with very different outcomes. Portland’s partnership approach resulted in a series of hurdles for the city and low rates of compliance by short-term rental operators. In contrast, Denver’s punitive approach led to high levels of user compliance and a clear knowledge base for city officials. These findings illuminate the complex challenges cities face as they confront powerful, well-funded, technology-based corporations.

Cities have taken different approaches to dealing with the knowledge gaps created by Airbnb’s data hoarding practices.

iStockPhoto // keko-ka

the regulatory landscape

Unfettered short-term rentals have significant impacts on cities of all sizes. To start, turning properties into short-term rentals takes them off the market for permanent residents, leading to an increase in housing and rental costs. Research by urban studies scholars Agustin Cocola-Gant and Ana Gago in Lisbon, Portugal, and by David Waschmuth and Alexander Weisler in New York City shows how short-term rentals contribute to gen-trification, as investors see short-term rental properties as a safe place to park their money. In cities like Barcelona, Spain, entire neighborhoods have been emptied of permanent residents. Previously permanent housing has been turned into vacation rentals, creating what researchers Agustin Cocola-Gant and Antonio Lopez-Gay call "foreign-only enclaves." City officials have had to weigh the consequences of short-term rentals, including affordable housing shortages, increased gentrifica-tion, and complaints about the transformation of residential areas into tourist destinations, with their perceived benefits, like increased tourism revenue and supplemental income to some Airbnb operators

In 2024, before new regulations took place, New York City was home to an estimated 10,000-30,000 illegal Airbnb listings.

iStockPhoto // frimages

Cities’ responses to the short-term rental market can be understood in the context of deeply entrenched perspectives on the relationship between government and private corporations. Recent research on technology companies suggests policymakers at all levels of government have promoted self-regulation, a key tenet of neoliberalism. Platform companies contribute to this perception, positioning themselves as "vectors of progress" compared to outdated government systems, as scholar of the platform economy Luke Yates shows. There is truth to this portrayal, as many cities are dealing with underfunded IT departments and aging technology infrastructures. Cities want to believe that they are forming equal partnerships with platform companies, leading them to implement self-regulation policies that grant companies high levels of flexibility and autonomy. Yet, as Daniela Stockmann, a digital governance researcher, shows, this regulatory framework is increasingly viewed by policy makers and scholars alike as ineffective, as "self-regulatory laws and regulations lag behind the way technology companies operate."

Systematically analyzing data hoarding helps identify the mechanisms underlying more and less effective regulations.

In the age of big data and AI, questions about regulation have gained new prominence, with some leaders of AI companies claiming to be eager to support government regulations. Observers have noted that these assertions can be understood as ways to gain legitimacy and control over the regulatory process or to shut down competition. In the housing sector, similar processes can be seen in relation to Airbnb. I emphasize the significance of data in the regulatory process and suggest that when data is needed to ensure regulatory compliance, cities cannot rely of self-regulation or partnerships. Instead, they must enact policies that compel compliance at the corporate level, not just the individual user level.

the comparative case

To understand how cities are responding to Airbnb’s presence and data practices, I interviewed city employees, Airbnb operators, former Airbnb employees, Airbnb concierge services, and consultants in six mid-sized U.S. cities. I also analyzed primary texts including city publications, Airbnb publications, news articles, and other materials related to the short-term rental market. In this article, I focus on just two cities—Denver and Portland—to highlight their divergent approaches. In doing so, I demonstrate the importance of systematically analyzing data hoarding to identify the mechanisms underlying more and less effective regulations.

Portland and Denver are similar-sized progressive cities in the Western United States. The fact that they are similar in many ways yet took such different approaches to regulating Airbnb’s data practices provides analytic leverage. Both cities actively promote themselves as tourist destinations, but their economies are not wholly reliant on tourism. They both experienced rapid population growth between 2010 and 2020. As a result of these booming populations, both cities have also seen rapid increases in housing costs. In Denver, rent nearly doubled between 2010 and 2020, while the rise in median housing prices was even steeper, more than doubling. Similarly, in Portland, rent and housing prices nearly doubled in this decade, increasing at higher rates than other cities in the country. Portland and Denver started out with similar policies that limited short-term rentals to primary residences and required operators to go through a licensing process but ended up with very different results, raising questions about the intervening steps in policy creation. By closely examining what happened in each city, we can gain insight into the mechanisms driving their respective policy outcomes.

Specifically, my analysis of Portland and Denver indicates that, in the context of data hoarding, cities can successfully regulate short-term rentals under two conditions: 1) when they have the capacity to verify operators’ compliance and can threaten both the operators and the platform companies with regular fines for violating the regulations, and 2) when they force cooperation from the platforms by relying on previously successful litigation. Denver was successful because it maintained its own list of compliant operators, whereas Portland relied on Airbnb to share this data, leading to regulatory failure.

the partnership and the punitive approaches

Over the past decade, cities have struggled to regulate the short-term rental industry, which doesn’t fit neatly into existing frameworks for regulating permanent housing, nor those for regulating hotels. As a result, city responses have varied widely. Shirley Nieuwland and Rianne van Melik, who study tourism and urban planning, organize these regulations into a typology ranging from laissez-faire approaches to full bans. This typology is a useful starting place for my findings, but it does not account for cities’ varied enforcement mechanisms. As we see below, while the types of regulations matter, the compliance mechanisms may matter even more.

portland’s partnership approach

In Portland, the number of short-term rentals doubled between 2015 and 2018. During this period, the majority of Airbnb listings in Portland and other cities went from being rooms in a shared residence to entire "homes." A government official involved in crafting the initial regulations in Portland told me, "It really started out as something sweet. ’I’m a widow… I’m a single Mom… and I rent out a room in my house to help make ends meet and to meet new people.’ Now what you hear is, ’I quit my job, and I have five houses, and this is my business.’" This trend is reflected globally in reports and in scholarly research, such as platform economy scholars Jelke Bosma and Niels van Doorne’s work examining the increasing professionalization of Airbnb hosts.

Portland’s first attempt to regulate short-term rentals was premised on the idea that homes should be used primarily for long-term residents. With consultation from Airbnb representatives, city officials wrote a policy called "One Host One Home." It limited short-term rentals to homes that were owner-occupied for the majority of the year. Further, operators could only run a single property. Yet the regulations didn’t stop operators from investing in multiple properties. A Portland city official told me, "We saw changes in hosting profiles after One Host One Home. Profiles went from actual people to fake people—Sal and Val and Pal. It went to concierge services, and it’s now people who don’t exist. It’s just shells. Who is the payment going to? We can’t find that information. The platforms will never give up this data." As this official noted, people found myriad ways to get around the city regulations. They counted on the fact that cities didn’t have the capacity to investigate every single listing. Shell companies standing in as full-time residents began to fill the city’s short-term rental registry. This made it harder for cities and neighbors alike to know who owned a given property, further obscuring the data.

Short-term rental markets—and cities themselves—have changed significantly since the introduction of platforms like Airbnb.

iStockPhoto // Wachiwit

In 2018, city officials knew that 80% of short-term rental listings were operating illegally. But they also had an incentive to keep the illegal listings: tax revenue. In an interview, an official in the Portland Revenue Department told me, "If we got mad at Airbnb, and they said [they were] not going to remit [taxes], we would lose a ton of money and our expenses would skyrocket.. As I like to say, don’t kill the goose with the golden egg." This perspective emphasizes the benefits of Airbnb operations in Portland but also the city’s reliance on Airbnb as a partner willingly remitting taxes on behalf of Airbnb operators. Portland city officials were unwilling to damage this perceived partnership in 2018 by imposing strict regulations on the company.

A year later, things changed due to both skyrocketing housing prices and a ninth-circuit court ruling in Santa Monica, California. The Santa Monica ruling upheld the right to impose rules obligating Airbnb to remove unlawful listings. Up to this point, other cities had been unsuccessful in their attempts to force Airbnb to share its data through litigation tactics. But this ruling opened the door for other cities to impose similar laws. With a legal precedent to support its dealings with Airbnb, Portland officials gave the company a choice: it could either restrict the properties listed on its website to those that had already gone through a licensing and approval process, or it could enter a data sharing agreement with the city. Airbnb chose the latter, agreeing to share host information with the city in a pass-through system in which operators register on the Airbnb site, then Airbnb passes on their information to the city. At the time, Portland’s chief of revenue proudly touted this as the agreement that would finally rein in Airbnb and get the city the data it needed.

The decision to offer Airbnb a choice in the regulatory process illustrates how Portland officials continued to see Airbnb as a partner. This decision had detrimental impacts down the line, when the city’s resources couldn’t keep up with the vast quantities of data shared by Airbnb. A 2023 investigative report from a local newspaper identified significant problems with the data sharing system, including an enormous backlog in license applications due to city understaffing, as well as the breakdown of the city’s software for receiving the data. The investigative reporter noted that "data sharing is completely broken at this point, due to a software problem that city regulators… basically can’t tell you exactly what that is."

Cities have struggled to regulate the short-term rental industry, which doesn’t fit neatly into existing frameworks for regulating permanent housing and hotels.

The Portland case highlights both the importance of data sharing and the barriers to its practical realization. When access to a company’s data is contingent on antiquated, underfunded city systems trying to keep up with cutting-edge software maintained by powerful corporations like Airbnb, the process is likely to fail, reinforcing data hoarding. Big data is changing the role and scale of data management for cities, creating new challenges for local governance.

Many cities are still at the starting point, still just trying to understand the scope and scale of their short-term rental markets.

iStockPhoto // Rafa Jodar

denver’s punitive approach

Denver’s approach to regulations started similarly to Portland’s. In an interview, officials recounted that Airbnb was involved in the process of writing local regulations in 20152016. As in Portland, Denver’s original regulations were tied to a licensing process in which operators could only rent their primary residence, and only after applying for and receiving a license.

Unlike Portland, however, Denver’s compliance rate started and stayed high. I argue that its success stems from the city’s early collaboration with an outside company called HostCompli-ance. In an interview, a Denver city official said, "We recognized pretty early that we needed third-party help because we couldn’t get data from Airbnb. So we contracted HostCompliance…. At the very least, we needed to track our compliance rate." As part of their contractual work, HostCompliance matches the Denver license database with data it scrapes from platforms and flags non-compliant properties.

Contracting with HostCompliance was a solid first step, but Denver took its compliance mechanism one step further. City officials began asking prospective hosts to sign an affidavit swearing that the property they were applying for was their primary residence; when the city had reason to believe these affidavits were fraudulent, it began taking people to court. When I interviewed Denver officials around this time, they were frustrated by the fact that Airbnb was not cooperating with the city. One noted that despite their years working with Airbnb and trying to find solutions to the question of compliance, she felt that Airbnb had a "blatant disregard for our laws."

Denver took a different tactic than Portland after the 2019 Santa Monica ruling. Instead of offering Airbnb a choice about how to share data, the city held the company liable for any illegal listings, threatening to fine Airbnb $1,000/day for each unlicensed property listed on Airbnb’s website. In response to the threat of high fines, Airbnb agreed to list only properties with a valid license number.

The question of governing was top of mind for the Denver officials I interviewed, and they actively sought to push back against the self-regulation model by maintaining their own database of licensed properties, rather than rely on Airbnb to share data. City officials there told me that they wrote strict regulations because they wanted to retain their power as a local government "by protecting the neighborly values" of their city and maintaining affordable housing prices

It’s worth pointing out here the factors that facilitated Denver’s high rates of compliance. These include Denver’s approach of incrementally increasing its enforcement mechanism structures on both the individual and company levels, as well as the role judicial rulings played in opening the door for regulations throughout the country. Ultimately, Denver achieved an estimated 90% compliance rate, compared to Portland’s estimated 55-85% compliance rate—a wide range that directly reflects the breakdown of Portland’s regulatory system.

data hoarding beyond airbnb

Multi-national corporations with large financial backing can control local governments’ access to data in one of two ways: by withholding data from cities or by inundating cities with so much data that their systems become overwhelmed. Although Portland city officials thought securing access to data would be a simple solution to their regulatory woes, they found that the volume of data they received presented challenges to effective governance. There was simply too much data for the city’s personnel and technology infrastructure to handle. As a result, Portland officials don’t even have an accurate sense of how many properties are operating illegally at present. To some extent, they are back at the starting point, still just trying to understand the scope and scale of their city’s short-term rental market.

In contrast, Denver recognized the importance of data from the outset, looking to an outside company to help it access and manage the data. While this has been effective, it raises broader concerns about governance. Spending resources on outside contractors rather than internal systems increases reliance on these outside companies and diverts resources away from government infrastructure. This has the potential to put cities back into the partnership model, where they are forced to think of corporations as partners in solving governance questions. Ultimately, this makes cities vulnerable to corporations’ profit-driven motives. The case of Denver shows that regulations are more effective for all citizens when government works as a partner to the people, which requires moving away from the self-governance model and enforcing punitive policies for corporations. Finally, my findings suggest it is not enough to fine individual users who fail to comply with local regulations. Instead, cities are much more effective when they can leverage fines or other consequences on platform companies. In the case of short-term rentals, cities must improve their software systems to better collect and control data and mandate that platform companies share the data needed to ensure compliance.

The policy implications for dealing with the data hoarding practices of corporations are all the more acute in the age of big data and AI. Companies increasingly collect and profit from data about our lives. As their technologies outpace the aging systems used by cities, other governmental entities, unions, and non-profits, it will be crucial for these organizations to have the data they need to effectively serve the public good. Responding to big data will require government to prioritize genuine partnerships with constituents rather than with multi-national corporations. It will also require a willingness to respond to data hoarding practices with more punitive approaches that combine legal and financial threats to enforce corporate compliance with local regulations. Data hoarding may be particularly evident in the short-term rental market, but in an increasingly platform- and algorithm-mediated world, our ability to enforce transparency has far-reaching implications.

recommended resources

Gaby Del Valle. 2019. "Airbnb vs. New York City," Vox, January 10. Provides an overview of the historically contentious legal relationship between New York City and Airbnb.

Amanda Hoover. 2023. "The End of Airbnb in New York," Wired, September 5. Describes NYC’s law severely limiting short-term rentals.

Juliet Schor. 2020. After the Gig: How the Sharing Economy Got Hijacked and How to Win It Back. Oakland: University of California Press. Explores what went wrong in the gig economy and how to make it more equitable for workers and platform users.

Tegan Wendland and Alex Goldmark. 2019. "Episode 897: New Orleans vs. Airbnb," NPR Planet Money, February 28. This case study examines how an explosion of Airbnb rentals transformed New Orleans neighborhoods into ghost towns and inspired tougher regulations.

Martha C. White. 2023. "Once an Evangelist for Airbnbs, She Now Crusades for Affordable Housing," The New York Times, May 12. An in-depth look at why one Atlanta resident changed from renting her property as a short-term rental to renting to permanent residents.