NYC says alleged illegal Airbnb operation raked in $2.4 million from tourists
- Mayor’s Office of Special Enforcement files lawsuit against rental manager Stay & Smile
- OSE claims that Stay & Smile’s 58 buildings hosted more than 9,000 guests illegally
The city says it found illegal short-term rentals in Hell's Kitchen and other Manhattan neighborhoods on Airbnb and Booking.com.
iStock
New York City is looking to ban a short-term rental operation that allegedly preyed on unwitting tourists—and collect millions in damages and fines.
The Mayor’s Office of Special Enforcement (OSE) sued to permanently block Stay & Smile from operating its allegedly illegal short-term rentals, which raked in $2.4 million from more than 9,000 tourists and visitors, according to a lawsuit filed Friday.
Stay & Smile allegedly rented out apartments at 58 buildings across Manhattan for stays of fewer than 30 days—which is illegal in NYC. OSE claims Stay & Smile leased out 30 properties across the Upper West and Upper East sides, the East Village, and Hell’s Kitchen, plus another 28 addresses that the city has yet to identify, according to the lawsuit.
The company agreed to stop renting out apartments for fewer than 30 days at the end of last year, and Airbnb and Booking.com stopped processing Stay & Smile’s bookings in September, according to the lawsuit. Stay & Smile did not respond to emailed requests for comment.
“Today’s lawsuit sends a clear message that we will not allow you to use our valuable housing stock for unlawful personal gain,” Mayor Eric Adams said in a statement.
OSE sued Stay & Smile and its principal Gokhan Simsek for $1 million in damages, plus millions in fines for the rental transactions from 2020 through 2023. Stay & Smile doesn’t own the buildings it rented; instead, Simsek and a business partner would lease apartments from mom-and-pop landlords and then rent them out at far higher prices, Crain’s New York Business reported.
Stay & Smile allegedly continued to illegally rent out units for months after the OSE sent the company and Simsek cease-and-desist letters in June last year. Stay & Smile finally stopped after the OSE began enforcing Local Law 18—which requires hosts of short-term rentals to register with the city.
Registration requirements
NYC requires hosts to register their apartments with the OSE if they rent out their unit for fewer than 30 days, though just 2,242 hosts have been added to that registration list as of June this year. At the same time, rental platforms need to display a host’s registration number so a guest can tell whether the rental is legal.
The registration rule enforced the city’s existing laws for short-term rentals, which prevents stays for fewer than 30 days if the owner is not on the premises, and was crucial to the city’s lawsuit against Stay & Smile, according to the filing.
“It is the registration law and the compliance of the booking platforms with said law that has prevented [the] defendants from continuing their illegal short-term rental operation,” as per the lawsuit.
Since Local Law 18 passed, NYC has cracked down on illegal short-term rentals. The city scored an $845,000 settlement over two alleged illicit Airbnb operations in March. The number of available Airbnb listings have plunged as a result, and the OSE’s prohibited buildings list—where short-term rentals are banned entirely—has grown to 12,826 as of the end of May.
