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Airbnb Fights Its ‘Party House Problem’

The luxury cabin in Incline Village, Nev., just north of Lake Tahoe, has a hot tub, sauna, pool table, fire pit, two patios and a backyard full of towering pine trees. It sleeps 14, according to its listing on Airbnb. And it has been a nightmare for Sara Schmitz, a retiree who lives next door.

The home is frequently the site of raucous bachelor parties and weddings, Ms. Schmitz said. Recently, a crew of college students stayed there, blowing weed smoke into her house. When she asked them to stop, they threw trash in her yard.

“It’s a constant party house,” said Ms. Schmitz, 57. She has called the police a dozen times about the property and joined the Incline Village STR Advisory Group, an organization that fights short-term rentals — for which the largest source is Airbnb.

What Ms. Schmitz encountered is part of the “party house problem” facing Airbnb. That’s when guests who book its properties hold parties in them, something that appears to be happening more frequently in the coronavirus pandemic, as people look for places to socialize with bars closed and hotels appearing risky. In July, New Jersey police broke up a party at an Airbnb with more than 700 people in attendance.

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Credit…Max Whittaker for The New York Times

The party houses pose a risk to Airbnb’s reputation and business as the $18 billion company prepares to go public this year. In many neighborhoods, people have been turned off by the rentals’ noise and annoyances. Complaints about party houses across sites like Airbnb and Vrbo soared 250 percent between July and September compared to last year, according to Host Compliance, which provides local neighborhood hotlines across the United States and Canada.

Worse, the party houses raise safety issues. Between March and October, at least 27 shootings were connected to Airbnb rentals in the United States and Canada, according to a tally of local news reports by Jessica Black, an activist fighting short-term rentals. The tally was verified by The New York Times.

Over the years, Airbnb employees have pushed executives to do more to address the party houses, said six people who worked on safety issues at the company. But they said the start-up largely prioritized growth until a deadly shooting last Halloween at an Airbnb made national headlines. Five people died.

The issues are now fueling Airbnb’s many fights with communities over how to regulate home rentals. Groups like the one in Incline Village are becoming more vocal and are sharing their strategies for fighting short-term rentals. Cities including Chicago, San Diego, Ann Arbor and Atlanta have recently proposed or enacted stricter rules or bans on the properties.

“Airbnb’s long-run viability and profitability is going to have a big question mark” if the party issue is not resolved, said Karen Xie, a professor at the University of Denver who researches the short-term rental industry.

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Credit…Max Whittaker for The New York Times

Christopher Nulty, an Airbnb spokesman, said the company is combating the party houses with “robust new policies, products and technologies to stop large gatherings, which far exceeds measures taken by others.” He said Airbnb has made changes even though the moves “knowingly impacted growth and nights booked.”

Airbnb began rolling out new rules against party houses around the same time that it was preparing to file to go public. In July, it said guests under the age of 25 with less than three positive reviews on the site could not book entire homes near where they live. In August, the same month it filed for a public listing, it placed a 16-person cap on reservations, banned parties and sued guests who were responsible for the events.

Last month, it started testing technology to block suspicious last-minute bookings and suspended some party houses from its listings. And ahead of Halloween — the one-year anniversary of the shooting at the Airbnb in Orinda, Calif. — it banned one-night rentals on Halloween.

Some said the measures were too little, too late.

“The damage has really been done to the neighborhoods during that time,” said Austin Mao, an Airbnb host in Las Vegas. He said the costs of repairing damages from parties at his properties, which host as many as 2,000 guests a month, have been tremendous. Neighbors complained so much about parties over the summer that he converted a third of the listings to long-term rentals.

In 2016, Christopher Thorpe, an entrepreneur in Lincoln, Mass., said he faced $28,000 in damages after an Airbnb guest threw an 80-person rave, complete with ticket sales, at his home. Mr. Thorpe later learned that other hosts had reported that guest for parties, but Airbnb had not removed the renter from the platform.

“Airbnb put up as many roadblocks as they could to avoid dealing with this,” Mr. Thorpe said.

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Credit…Kyle Oster/Fox5

Airbnb has long grappled with safety issues, said the six former employees who worked on trust and safety and who asked to remain anonymous.

Two of them said they asked Airbnb to sue people who frequently threw parties at the rentals for the damages, but executives feared that would draw attention to the events. Several also said they pushed to limit or remove the “Instant Book” option, which confirms bookings immediately without requiring approval from the host. But the feature, which was used by almost 70 percent of listings in 2019, boosted convenience and made Airbnb more competitive with hotels. So Airbnb did nothing, they said.

Mr. Nulty said Airbnb promoted Instant Book so hosts could not discriminate against guests by denying some of them a booking, adding that hosts can turn off the feature. He denied that executives had been urged to sue party promoters and said its legal team did not reject proposals because of concerns over public attention.

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Credit…Max Whittaker for The New York Times

In Incline Village, which has a population of around 9,000, the Airbnb party houses have increasingly grated on residents. Shortly after Joe and Edie Farrell, retired physical therapists, moved permanently into their vacation home there last year, the house next door became an Airbnb. Blasting music and drunk people created “10 days of anxiety” around July 4, said Ms. Farrell, 70.

“Airbnb is basically helping people set up a hotel in our neighborhood,” Mr. Farrell, 68, said. “Now you have to worry about your safety and peace and quiet.”

Then came last year’s fatal shooting at the Airbnb in Orinda. A Vice news article that outlined Airbnb’s fraudulent listings and fake host accounts also went viral, raising questions about trust.

In response, Airbnb said it would ban parties thrown by professional organizers that were promoted on social media. It also said it would verify that all seven million of its listings were as advertised by Dec. 15, 2020, and announced a global hotline for neighbors to report parties. And it promoted its head of policy, Margaret Richardson, to be vice president of trust. (She has since left.)

But when the pandemic hit in March, executives scrambled to keep the company afloat. Verification stalled. (Airbnb said 40 percent of listings have “begun the verification process.”) The neighborhood hotline, which was supposed to be available globally, is only accessible in the United States, Canada and the Netherlands.

In May, Airbnb cut a quarter of its staff, including a large chunk of its safety team. In an internal Q. and A. with Brian Chesky, Airbnb’s chief executive, employees protested the layoffs. One said the decision would leave guests without support for weeks, according to a list of the questions viewed by The Times. Another wrote that he would feel unsafe staying in an Airbnb or renting his home on the site because of the lack of a safety plan.

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Credit…Ray Chavez/The Mercury News, via Getty Images

In the first week after the layoffs, safety cases piled up, said former employees. Airbnb asked many of those it had laid off to return temporarily to work through the cases; many of those workers have since remained, said current and former employees. In Dublin, the layoff plans were rescinded altogether, they said. Airbnb said the team that manages user safety is now the size it was before layoffs.

In August, Airbnb introduced more changes to improve safety. It sued a guest who held a party in Sacramento that resulted in three people getting shot. It then sued another guest who hosted a party in Cincinnati, where a property manager was shot in the back while trying to break up the event.

On Oct. 19, the company sued Davante Bell, a party promoter in Los Angeles who threw parties at Airbnb mansions. “Airbnb has suffered and continues to suffer reputational harm and potential liability to third parties as a direct result of Bell’s actions,” the company’s lawsuit said.

Mr. Bell, who declined to comment on Airbnb’s suit, has been selling tickets to a new party called “Nightmare on King Bell Street Halloween Mansion Party” on social media. This week, he continued posting fliers for the event. When asked if the party would be held at an Airbnb, Mr. Bell did not answer.

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PG&E Ordered to Pay $3.5 Million Fine for Causing Deadly Fire

A California judge ordered Pacific Gas & Electric on Thursday to pay a $3.5 million fine for causing the Camp Fire, the blaze that killed scores of people and destroyed the town of Paradise in 2018.

Judge Michael R. Deems of Butte County Superior Court read the sentence, which matched a plea agreement between the company and a local prosecutor, after hearing statements from survivors of the 84 people killed in the fire, many of whom said PG&E was getting away with a slap on the wrist. The judge seemed to echo that sentiment.

“If these crimes were attributed to an actual human person rather than a corporation, the anticipated sentence based on the applicable statutes to which the defendant has pleaded guilty would be 90 years to be served in state prison,” Judge Deems said. “Nevertheless, the court’s sentencing options are limited. As a corporation, PG&E cannot be sentenced to prison. The only punishment that the court is authorized to impose in this situation is a fine.”

PG&E pleaded guilty on Tuesday to 84 counts of involuntary manslaughter and one count of illegally causing the fire. An estimated $30 billion in liability from that and other fires forced the company to seek bankruptcy protection in January 2019. State regulators have said that the utility repeatedly failed to maintain a transmission line that broke from a nearly 100-year-old tower, igniting the Camp Fire. The company’s failure was all the more glaring because the line cut through a forested and mountainous area, and some of the company’s towers had been knocked down by strong winds well before that blaze.

The manslaughter case is the second time that PG&E, California’s largest utility, has been found to have committed serious crimes in recent years. PG&E was convicted of six felonies in federal court after one of its gas pipelines exploded in 2010, killing eight people in the Bay Area town of San Bruno. The company has been on probation since that conviction in 2015.

In the Camp Fire case, the Butte County district attorney, Michael Ramsey, has said he sought the maximum sentence allowed under California law for the charges he brought. Separately, the California Public Utilities Commission has imposed an almost $2 billion penalty on the utility for its negligence in causing fires in 2017 and 2018.

A federal judge overseeing PG&E’s conviction in the San Bruno case could impose additional penalties on the utility for violating its probation.

Dozens of survivors gave tear-filled statements about losing relatives and friends. Some told the court that the $3.5 million fine fell far short of the punishment PG&E deserved. The company also must pay Mr. Ramsey’s office $500,000 for the costs of its investigation and prosecution.

“The court is supposed to provide justice,” said Joseph Downer, whose brother Andrew died in the fire. “I don’t believe justice is served by a $3.5 million fine. If ever there was a corporation that deserved to go to prison, it’s PG&E.”

Mr. Downer said he now suffers depression and wakes up in the middle of the night. “This whole event has been super tragic,” he told the court. “This is my big brother. This is the guy who taught me so much in life. PG&E took all of this from me, all of it.”

Philip Binstock recounted the life of his father, Julian, who grew up in a family of modest means but went on to attend Harvard and become a vice president at Warner Communications. He also angrily criticized PG&E for its failings.

“You had the capacity to know what you were doing would kill people,” Mr. Binstock said. “You knew what you were doing was wrong. And rather than reduce your bonuses, you allowed your failed equipment and your improper inspections to kill people.”

William L. Smith, PG&E’s incoming interim chief executive, told the court that the company accepted blame for the fire and was working to improve.

“It can never be said too many times, we accept responsibility,” Mr. Smith said. “On behalf on everyone at PG&E, I’m truly sorry for the loss of life.”

State officials have required the company to make major changes. PG&E needed California’s support to exit bankruptcy, and Gov. Gavin Newsom demanded the utility reform its board, change its leadership structure, improve safety, compensate fire victims and exit bankruptcy by June 30.

Although the governor has no direct authority over the bankruptcy case, PG&E had to meet his requirements in order to participate in a $20 billion fund that will help cover liability utilities could face from future fires started by their equipment. PG&E needs access to the fund to convince stock and bond investors that it would not slip into bankruptcy again for starting fires.

U.S. Bankruptcy Judge Dennis Montali said in a memorandum on Wednesday that the company’s reorganization plan, which will provide $13.5 billion to wildfire victims, was feasible and the only one before the court. He has scheduled a hearing for Friday, at which he is expected to give his final approval to PG&E’s plan.

“All of the victims, all of the over sixteen million PG&E customers in Northern California, indeed all of Northern California if not the rest of the country, know the story,” Judge Montali wrote in his memo. “Leaving tens of thousands of fire survivors, contract parties, lenders, general creditors, allegedly defrauded investors, equity owners and countless others with no other options on the horizon is not an acceptable alternative.”

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