News From the Front: the Mayor of Paris Sues Airbnb

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15/2/2019
hospitality-on.com


Paris City Hall, through its mayor, Anne Hidalgo, announces it is bringing legal action against Airbnb. The City of Paris is demanding 12 million euros from the platform, arguing that the latter does not respect the law "Loi Elan du 23 Novembre 2018". The platform appears to have more than 1010 illegal listings available to rent that city agents had identified. A new chapter in the tale of opposition between Airbnb and City Halls, a fight where the final battle will probably take place in Brussels.

The context reason:

This Sunday, February 10, the mayor of Paris, Anne Hidalgo, announced in an interview with the Journal du Dimanche, announced that Paris City Hall would would take legal action against Airbnb. This news is confirmed b AFP which gave dates: a summons addressed February 8 – two days prior to the interview – for an initial hearing at the Tribunal de Grande Instance de Paris on May 21, 2019. This should guarantee media coverage of the new buildings designed by Renzo Piano.

This announcement of a summons to the Tribunal de Grande Instance does not really come as a surprise: Ian Brossat, deputy mayor in charge of lodging for the Mairie de Paris, recently announced that preparations were underway to take action. Last January 17, during another related case with Airbnb: the Mairie asked for a fine to be paid by a business that was renting apartments through the platform but had not respected the law, which the court confirmed; nonetheless, the business requested and obtained a delay for payment, the reason being that a decision from Brussels, that was on hold, might nullify the fine by declaring the French law to be in opposition to European law (read more about this here).

This judgement prevents City Hall from Mairie from attacking owners, which was her initial strategy: nothing left to do but attack the platform itself. At least that is what the administration at Paris City Hall has decided to do. If we reread declaration made by Anne Hidalgo to the Journal du Dimanche, where she clearly expresses this shift: "I have nothing against Parisians who rent out their homes a few days a year to put some butter on their spinach. The problem lies in owners of several properties who the apartments to tourists year round without declaring them," and she adds, and this is what is new,  "and the platforms, accomplices, that host them."

Several arguments have been put forward by the town hall to justify these attacks against short-term rentals. First, the exit of housing from the local rental circuit to the one destined for tourists: the Town Hall estimates that 20,000 apartments have left the normal market for the tourist market. This figure appears in the book written by Ian Brossat, the deputy to the mayor in charge of tourism: "Airbnb ou la ville ubérisée"; published by "La ville brûle". A whole program. Anne Hidalgo also mentioned the dangers of overtourism to the AFP, specifying that she did not "want Paris to find itself in a situation similar to that of Venice or Barcelona, where the populations are protesting against visitors." In the case of these two cities, there are sometimes rather violent demonstrations, with tags such as "tourists you are the terrorists" which covered the city of Barcelona in 2016 and 2017.

This should be seen in the context of the decline in the number of inhabitants in Paris: between the 2011 and 2016 censuses, the city is estimated to have lost an average of 11,930 inhabitants per year (figures from the APUR, the Parisian equivalent of INSEE). Airbnb has established itself as a real subject for European metropolises. In France, the law allows municipalities with more than 200,000 inhabitants to implement mandatory registration with a number to be listed on the platform: Paris has been quick to set up this system. In Amsterdam and Barcelona, it is now prohibited to rent a main residence on the platforms for more than 30 days. Barcelona's mayor, Ada Colau, has grown accustomed to making attacks on the platform, after having succeeded in obtaining a half a million euro sentence in 2017, she said she would continue to file complaints "as long as the site continues to list illegal apartments". It has become a real political issue. The mayor of Barcelona is a long-time activist for housing rights. Ian Brossat, the housing deputy in Paris, leads the European campaign of the French Communist Party. The next municipal elections in Paris will be held on March 23 and 30, 2020.

The battle will undoubtedly find its conclusion in Brussels. Indeed, the Commission has taken up the problem. This was announced by Airbnb in a press release on January 24: "The European Commission announced today (NB: still according to the company's press release) the launch of an investigation to determine whether the cumbersome registration procedure imposed on furnished tourist accommodations in Brussels is in violation of European regulations." This argument is repeated in another press release from the company on February 10, just after the City Hall's announcement: "Airbnb has already implemented appropriate measures to help Parisian residents rent their accommodations in accordance with the applicable rules, and this, in compliance with European regulations. Nevertheless, they maintain that the regulations implemented in Paris, which affect one in five Parisians, are ineffective, disproportionate and contrary to European regulations."

The site thus pursues its activities: for the moment nothing has been decided on the conformity between national and European law. In this struggle the lobbies twist their weapons. On the Airbnb side, the European Holiday Home Association (EHHA) is leading the fight, and has already filed a complaint against the laws of Paris, Brussels, Berlin and Barcelona. The lobbyist's latest press release, on January 31, is in fact almost an opinion piece against restrictions on the short-term rental market. On the other hand, AhTop and the GNI (Association pour un Hébergement et un Tourisme professionnel and the Groupement National des Indépendants), two French interprofessional hotel trade unions, welcomed a "courageous" decision by Paris City Hall, which "takes the problem head-on". Indeed, according to calculations in Le Monde newspaper, an accommodation on Airbnb cost on average 34 euros per person in 2016... compared to 80 euros per person for a hotel room. This does not prevent Paris's hotel industry from presenting excellent results in 2018.

Summons to the Tribunal de Grande Instance by Paris City Hall

More specifically, Paris City Hall has the right to request a fine from the platform since the Elan law was passed in November 2018. This law specifies that the platforms are responsible for the ads appearing on their sites. However, since 2017, cities have been able to demand that hosts, request a registration number for their apartments. As this number is mandatory, it must be present on the listing, and Airbnb must ensure that it is. And it is on this very point that the Paris City Hall bases its case.

Members of the administration, some thirty agents, who have the right to enter the apartments (a priority constitutionality issue is under discussion on this specific subject, again regarding a listing on Airbnb), discovered an initial list of 1010 ads that did not include the famous registration number. It should be noted that these 1010 listings are the result of an initial undertaking that does not take into account all the districts of the capital. The 60,000 or so Airbnb listings in the Capital, which are open for rent, have not all been checked (Inside Airbnb, in open data, gives a current figure of 59,881 with at least one rental day available).

This figure of 1010 illegal listings on the platform helps to understand the fine of 12,650 million euros requested by the Town Hall: 12,500 euros per listing in contravention of the law, this is the figure given by the Elan Law. That said, it is unlikely that this figure will have the "electroshock effect" desired by the Parisian executive, given that it seems ridiculous in relation to the American giant's financial health. The group has come a long way from providing an air mattress in a roommate in San Francisco ("Air Bed... and breakfast: AirBnb) to being the global accommodation giant.

This summons is all the more interesting because, for the time being, Airbnb's defense, particularly in relation to Europe, concerns regulations concerning owners, short-term leases, etc., and not regulations with which the platforms themselves must comply. This is a point on which Airbnb has already been addressed, in particular by the European Commission, which has asked the platform to make its offer more visible, in order to ensure product clarity for customers. The press release containing all these points dates from September 2018 on the commission's website. For example, the European executive requires Airbnb to specify whether or not the host is a professional. For the rest, the European Court of Justice is not expected to rule on the conformity of national laws before 2020.

Airbnb: from takeovers to lobbies

With this announcement from Paris City Hall, Airbnb is constantly making the news in the world of accommodations. On January 25, the market place announced the acquisition of the Danish startup Gaest.com, which specializes in coworking (find our article here). On February 8, Airbnb announced the Fred Reid was to join its team; this aviation expert was involved in the creation of the SkyTeam and Star Alliance alliances. The goal, after the launch of Airbnb event, is to create a brand new area of activity: Airbnb transport to allow the company to accompany tourists from the time of departure, to accommodation, and then activities with Airbnb Experience. It is the implementation of a 360° platform.

All this for a company that is still not listed on the stock exchange and is considering entering the market in 2019.