(Bloomberg) -- New York City sued a startup that provides services for listings on Airbnb Inc. and other home-sharing sites, escalating its war on short-term apartment rentals.
The city said Guesty Inc.'s business model is focused on helping people flout laws against short-term rentals. In the lawsuit, filed Monday in state court in Manhattan, the mayor's office of special enforcement said it seeks records and testimony to determine the impact of Guesty's business on New York's housing market and neighborhoods.
Founded in 2013 in Tel Aviv and backed by startup incubator Y-Combinator, Guesty attracted $60 million in funding as of March 2019. Guesty's platform lets users manage listings on multiple websites, including Airbnb, Booking.com, and Expedia.com's Homeaway, and can connect them with providers of services like cleaning and key handovers.
In its lawsuit, the city took particular note of Guesty's claim of “full integration” with Airbnb's site and pointed out that Guesty had in its marketing referred to long-term tenants as a “ball and chain” hobbling landlords.
“Guesty is apparently aware of New York laws restricting the conversion of long-term permanent dwellings intended for ordinary New Yorkers making the city their home -- the people Guesty believes are a ‘ball and chain,'” the city said in the lawsuit.
Read More: Airbnb to America's Big Cities: See You in Court
“Guesty is a software solution that provides property management companies worldwide with tools that enable them to streamline and automate their business operations,” the company said in a statement. “As a tech solution to those who offer short-term rental stays, we most certainly do not advocate for circumventing local legislation in any city.” Airbnb declined to comment.
Supported by the city's powerful hotel workers' union, Mayor Bill De Blasio has been locked in a yearslong battle with Airbnb. New York prohibits owners from renting out their entire apartments or homes for less than 30 days without being present in the unit and says as many as two-thirds of Airbnb's listings in the city could be illegal. The city has boosted its budget to about $8 million this year to hunt down those listings -- a tenfold increase in four years.
Last year, New York introduced a new law that would force Airbnb and HomeAway to turn over the names, addresses and phone numbers of their hosts. The companies sued claiming the law violated privacy rights. The home-share companies won a temporary injunction while the case winds its way through the courts and are now in talks to resolve the lawsuit.
A successful agreement in New York would pave the way for a smoother stock listing for San Francisco-based Airbnb, which has said its plans to go public this year and was last privately valued at $31 billion.
To contact the reporters on this story: Chris Dolmetsch in Federal Court in Manhattan at cdolmetsch@bloomberg.net;Olivia Carville in New York at ocarville1@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Anthony Lin
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