City sues operators of ‘unscrupulous’ $5M illegal hotel ring

New York City is suing 13 firms and individuals who for years ran a massive network of illegal Airbnb rentals that took dozens of housing units off the market, according to a supreme court suit filed Wednesday.

Nearly 60,000 guests were duped into booking rentals in Manhattan, Queens, and the Bronx that they believed were safe and legal. Instead, visitors arrived to discover unsanitary and dangerous conditions including one three-family home in Astoria that was illegally subdivided into 12 separate hotel rooms with 24 beds, says the Mayor’s Office of Special Enforcement (OSE).

“Several of the illegal short-term rentals in the subject buildings have led to the elimination of permanent housing in apartments as well as smaller, one-or-two family private dwellings—the kind of housing stock which gives neighborhoods in Queens their affordability, family scale, and charm,” the suit states. “These permanent residences are now essentially de facto hotels, and they entail serious overcrowding and fire safety issues.”

The illicit hotel ring amassed $5 million from Airbnb with more than 20,000 illegal short-term rental reservations in 36 buildings from 2015 to 2019. Of those buildings, 24 were located in Astoria where the one-and-two family homes that are a signature of the northwest Queens neighborhood were converted into fetid hotel rooms.

Courtesy of the Mayor’s Office of Special Enforcement

OSE estimates that more than 60 units of housing were taken from the market, including 10 mostly rent-stabilized buildings in Manhattan and the Bronx. In hundreds of irate online reviews, hotel guests complained of issues including lack of heating and hot water, deceptive advertisements, and overcrowded accommodations. One review described a rental that reeked of sewage.

“The bedroom STUNK, there was one bare bulb in the overhead light which did not work, the bathroom STUNK WORSE THAN THE ROOM and it is 100% the smell of sewage,” one guest who booked a stay in an Astoria room wrote in an online review. “HORRIBLE! SLEEP ON A BENCH IN CENTRAL PARK INSTEAD, YOU’LL HAVE A BETTER EXPERIENCE!”

To thwart the city’s enforcement efforts, according to the lawsuit, hotel operators coached guests to lie about their stays, instructed them to deny access to inspectors, and refused to answer inspectors’ questions “with the goal of: ‘Let’s keep Airbnb alive!’” There was even a poster at one building that read: “DO NOT LET ANYONE IN ESPECIALLY: PEOPLE FROM DOB (Department of Building) or FDNY.”

The executive director of the OSE, Christian Klossner, condemned the “unscrupulous” operators of the scheme.

“Across the city, communities are threatened by an industry that allows illegal operators to mislead visitors and turn housing into profit,” said Klossner. “New Yorkers deserve to have their housing protected, and visitors deserve safe, legal accommodations when they visit our city.”

The suit is the latest in a string of challenges cracking down on Airbnb rentals. It’s the first to be filed in Queens. The city is pursuing other cases targeting illegal hotels operating in Manhattan, Brooklyn, and Staten Island, including a $21 million lawsuit against a group of real estate brokers that accuses them of using Airbnb to illegally rent out 130 apartments in 35 Manhattan buildings.

Last year, the City Council passed a law to force home-sharing companies to disclose information about their hosts to OSE. Lawmakers argue that the data will help them target illegal operations, but the law is currently tied up in court. Airbnb maintains that it aims to work with the city to curb illicit listings.

“We have long said that we want to work with the City on a regulatory framework that will provide for effective enforcement against illegal hotel operators,” said a spokesperson with Airbnb. “After working with the City and providing data in response to valid legal process, we will continue to urge the City to come to the table, so that we can find a solution that addresses our shared enforcement priorities while still protecting the rights of regular New Yorkers.”