Attorney General Eric Schneiderman blasted Airbnb on Thursday for misrepresenting its business to the public and defended his subpoenas of the online hospitality startup’s records.
In his first public remarks about Airbnb, Schneiderman told a roomful of business and political elites at the New York Athletic Club that he would protect the state’s “extraordinarily successful” hotel industry as the San Francisco-based company gears up to enter the stock market in what could be a record-breaking public offering later this year.
“What they’re telling investors…as they are moving toward an enormous IPO…are things like we just passed Hyatt, we’ve just passed Hilton,” he said.
“They are selling to investors they are a hotel network and they are telling the public that they are not.”
The privately held subletting service has raised about $500 million in capital and could be valued as high as $10 billion, according to multiple reports.
But the company’s rapid growth has attracted the attention of state regulators, including Schneiderman.
“We have no problem and we’ve never said if someone wants to rent out a room in their apartment, that doesn’t violate the law,” Schneiderman told the Crain’s New York breakfast event.
“What is illegal is running illegal hotels.”
State prosecutors demanded Airbnb’s records last year to identify New York users who are illegally renting out their apartments, but the company has moved to quash the subpoena.
An Albany judge heard arguments on Tuesday, but did not say when he would issue a ruling.
Almost two-thirds of Airbnb’s 19,500 city apartment listings were in violation of state law and more than 200 of those offerings came from just five of the company’s hosts, according to an analysis the state Attorney General’s Office released on Monday.
Schneiderman said his investigation was being done to safeguard both tenants and tourists because hotels have fire safety and health codes that Airbnb rooms do not.
“Recently we have had statements from prostitution rings saying ‘We love this because it’s buzz in and buzz out, hotels ask a lot of questions.’”
Airbnb spokesman Nick Papas said Schneiderman’s inquiry was misguided.
“[Schneiderman is] targeting thousands of regular New Yorkers just trying to make ends meet,” he said.
“We should all be working together to help New Yorkers, not make things harder for them.”