Last week, New York State Attorney General Eric Schneiderman named Peter Chen, a 30-year-old bartender, as one of the top five Airbnb users in the city who had at least one illegal listing. The purpose of the disclosure was to put pressure on Airbnb, the web-based room-renting service that has ballooned into a $10 billion company without following the regulations of legal hotels. The other four named on the attorney general's list were a mix of real-estate companies, brokers, and hotels. Chen was different — just a guy, not working in the real estate industry, listing his friends’ rooms. He insists he thought he was on the right side of the law. But earlier this week, in a preemptive move to thwart more scrutiny by the attorney general, Airbnb canceled his account, along with the accounts associated with 2,000 other listings.
In its recent push against Airbnb, Schneiderman’s office argues that the site regularly flouts a state law prohibiting renters in buildings with three units or more from subletting entire apartments for less than 30 days at a time. He and other critics claim Airbnb offers a haven for absentee landlords to run de facto hotels without following hotel regulations. State Senator Liz Krueger has accused Airbnb of taking apartments “off the market for permanent residents” and turning residential buildings into “illegal, unregulated hotels with a constant stream of strangers coming in and out.” Airbnb’s brash position, meanwhile, is that the brick-and-mortar world has to catch up with the new, cloud-based way of doing business. When the Post recently ran an exposé about Airbnb being used by prostitutes, the company countered by saying that such things happen all over the hospitality industry. And when Schneiderman filed subpoenas last fall for some 15,000 Airbnb user records in New York, Airbnb resisted, citing privacy concerns and calling the move a “government-sponsored fishing expedition.”
For his part, Chen had been the sort of power Airbnb user that the company would have held up as an example of the new sharing economy. Before coming to New York in 2004, Chen had traveled around the world — London, Paris, Milan, Taipei, Honolulu. “I always wanted to see New York,” he says. He worked full-time for six years to save enough money for a condo in Williamsburg, a studio on a high floor that was large enough for him to convert into a two-bedroom. As he tells it, in 2012, a friend had just returned from Paris and brought several of her friends to stay with Chen. They started talking to him about Airbnb, and Chen got the idea to post a listing for his extra room. He booked it right away, and suddenly he was a businessman. “It was kind of like a domino effect,” he says.
His client list grew by word of mouth. “Friends wanted to list their places but didn’t want to start at the very beginning,” Chen says. “Because I already had a hundred reviews, it would be easier for me to just manage it.” He took ten percent and they did the hosting themselves. In return, his friends got to piggyback onto his user profile, which was both friendly and personal: "I've met lots of really cool people from all around the world, each with a story to tell," he wrote. "I always look forward in connecting with new people. Check in with me as a guest, but we'll always part with a new friendship." He racked up more than 300 reviews, most of them glowing (“very considerate and helpful”; “accommodating and on top of everything”; “It’s not easy to find someone like him”).
His client roster climbed to 38 different rooms in and around Williamsburg, though never more than 15 at a time. The clients, he says, are all people he calls “friends” — some old, others he’s met along the way. Most of their rooms were in large lofts. “I was trying to keep up with the legalities of it," Chen says. "Everything seemed like it was in a gray area.” From what he understood, what he was doing was legal as long as the host was staying there with the guests. “The amount of times I’ve rented an entire apartment is only a handful,” he says, “for when friends of mine are taking a one- or two-week vacation.”
As the agent of others’ rooms, Chen made anywhere between $7 to $8 per night (rates varied by the type of room and the time of year). He handled all his agent duties on his smartphone, fielding a batch of emails in the morning and another at night. But it wasn’t lost on him how much more he could make if he rented more rooms of his own. In time, he left his Williamsburg place (renting it out to full-time tenants, not on Airbnb) and started renting a four-bedroom in Southside. He moved into one of those rooms and listed the other three on Airbnb. The fees from those three rooms “basically covered my rent,” he says. The money he made from his friends’ places was profit.
In total, Chen says he made $45,000 a year for himself and as an agent for others on Airbnb, though he insists he never saw enough money from Airbnb, after paying his own rent and taxes, to quit bartending altogether. “Maybe some corporations buy up whole buildings and rent entire apartments out,” he says. “But I don’t have any type of capital. I really didn’t make the astronomical rent the attorney general seems to think I did.” Now, for better or for worse, Chen’s agenting career is over. His friends, he says, just have to put up their own Airbnb profiles now. He is picking up more bartending shifts and throwing ads up on Craigslist for the three vacant rooms in his apartment — just looking for regular monthly rent-paying roomies. “I mean, that’s the only way I can have a place,” he says. "I’m not going to be able to afford a four-bedroom myself.”