City squeezing startup Guesty for info in Airbnb crackdown

Guesty, a software startup that services property managers who use Airbnb and other sites for short-term rentals, is in talks with the city to resolve a dispute about illegal listings.

The city accused the company in a March court filing of “providing services to those that actively choose to flout New York’s laws by facilitating multiple illegal short-term rentals.”

The Mayor’s Office of Special Enforcement demanded records and testimony from the startup.

According to a July 28 court filing, Guesty and the city have since negotiated a confidentiality order “to allow for the production of agreed-upon records at this time, accommodating both the city’s investigative needs and Guesty’s confidentiality concerns.”

A spokesman for the Office of Special Enforcement said the agreement “ensures that the city will obtain evidence in its investigations into illegal activities endangering New York City residents and its housing stock.”

But a spokesperson for Guesty said the talks were ongoing.

“With the goal of ultimately resolving this matter, Guesty has engaged in discussions with New York City about local short-term rental regulations and to make clear our role” as a software provider, the spokesperson said. “As a step in these ongoing discussions, we entered into a standard confidentiality agreement to ensure that any information provided is protected.”

The case is part of a wider effort from Mayor Bill de Blasio to crack down on illegal short-term rentals across New York City, where hosts are prohibited by state law from renting dwellings for fewer than 30 days without a resident present. Critics say such rentals make apartments unavailable for tenants — exacerbating the housing shortage — and provide unfair competition to hotels.

In June, the city settled a major lawsuit with Airbnb that dated back to 2018 and was a roadblock in Airbnb’s path to a public offering. Under the settlement agreement, Airbnb agreed to hand over listing information about its hosts on a quarterly basis, including names, phone numbers, addresses and other details.

The move, designed to help the city weed out illegal short-term rentals, could cost the startup tens of thousands of listings, according to Bloomberg.

Founded in Israel in 2013, Guesty had raised $60 million in funding as of last March. While the startup is not a rental provider itself, its software integrates with short-term rental websites and helps commercial operators manage networks of rental properties across multiple platforms, including Airbnb, Booking.com and HomeAway.

“You’re not using Guesty in New York City if you’re renting out your own home occasionally,” Christian Klossner, the executive director of the Office of Special Enforcement, told Wired in March. “You’re using Guesty if you have multiple listings on a short-term rental platform that you’re trying to manage.”

“And as a result, they are getting a direct commission from the perpetuation of these illegal short-term rentals.”

Write to Sylvia Varnham O’Regan at so@therealdeal.com