Big chunk of Airbnb revenue comes from illegal activities, regulator hears ahead of IPO

By Sean Bennett

A ‘substantial portion’ of Airbnb’s annual revenue comes from facilitating illegal rentals, according to an open letter delivered to the regulator in September ahead of the short-term rental platform going public on the stock market.

A collection of over 45 short-term rental organisations and interest groups from across North America, Europe and Australia have contacted the Securities and Exchange Commission in Washington[1]

The signatories called for the SEC to ‘compel Airbnb to fully and truthfully provide all information relevant to investors’ prior to the initial public offering, so as to ensure potential investors are not misled.

The request was made based on significant findings of illegal rental activity across the world. According to the letter, officials in Paris have estimated that as many as half of Airbnb’s listing in the city are illegal, while other popular destinations, such as Barcelona, London, Amsterdam and Singapore, are reporting similar numbers.

In Vancouver, a city-wide scan found that, like in Paris, ‘more than half of all the listings are non-compliant’ with City regulations[2]

These revelations come despite the implementation of stricter short-term rental rules in past years, calling into question the effectiveness of city enforcement.

In Toronto, the Fairbnb coalition of industry professionals published a report which showed illegal listing have actually increased since the city brough in its own stricter regulations. According to the report, the city boasts almost 10,000 Airbnb listings which directly contravene one or more short-term rental regulations[3]

Airbnb has not taken these accusations lying down. In Vancouver, the company issued a statement to CTV News branding the findings as ‘ridiculous’ and ‘inaccurate’, though they did agree to share data with reporters.

As for Toronto, the Short-Term Rental giant accused the Fairbnb coalition of ‘manipulating inaccurate data to protect the bottom line of their hotel industry benefactors.’

ThinkPol reached out to both Airbnb and SEC for comments on the situation but received no response.

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