Airbnb deflated as Jersey City voters tighten rental rules

Jersey City voters’ reviews of Airbnb are in, and the startup did not make the grade.

In a closely watched referendum Tuesday a majority of residents overwhelmingly supported tighter limits on short-term rentals in the city, including an annual 60-day cap at properties where the owner is not on site, and a ban in buildings with more than four units.

The result is a major blow for Airbnb, which spent $4.2 million backing an aggressive opposition campaign against the law, largely fronted by Jersey City hosts.

“Airbnb made a very big bet and lost,” said Bradley Tusk, a political consultant and former campaign manager for Michael Bloomberg, adding that the outcome would send a negative sentiment to public investors and the market ahead of the company’s anticipated IPO.

In an emailed statement after the final result was announced, Airbnb representative Christopher Nulty said the company always knew the fight, which pitted the startup against hotel owners and union workers, would be tough.

“Cities from Buffalo to San Francisco and Boston to Seattle have managed to pass comprehensive short-term rental regulations without punishing tenants or creating red tape and onerous registration systems,” he said. “It’s unfortunate to see the hotel-backed special interests run a campaign that moves Jersey City in a different direction.”

In 2015, Jersey City struck an agreement with Airbnb to collect a 6 percent hotel tax on homes rented on the platform — a first of its kind in the tri-state area and a sign that lawmakers were open to accepting and regulating Airbnb.

However after listings grew from 300 to roughly 3,000, Mayor Steve Fulop changed his tune on the platform and backed stricter controls. The Hotel Trades Council and the Sharebetter Coalition (which is bankrolled largely by the hotel industry) spent a little over $1 million on a campaign in support of the restrictions.