Chicago stopping more than 2,400 Airbnb hosts from listing their rooms

City bureaucracy – not consumer complaints – has left thousands of Chicago hosts barred from the Airbnb platform.

Thousands of providers of short-term lodging services in Chicago are scrambling to figure out why the city rejected their renewal applications.

More than 2,400 ­Airbnb hosts, according to the Chicago Tribune, received rejection emails the week of Aug. 7 notifying them that they’d now be required to remove their room listings from the platform within seven days, or face punitive fines.

The city requires each short-term room listing to be matched by a registration number. For each listed room unaccompanied by a registration number, hosts can incur fines of up to $1,500 per day. The city’s actions could potentially force Chicagoans out of their homes or apartments, as they forego income from willing travelers using the short-term rental service.

Email notices warned applicants that their requests for registration renewal had contained “incomplete or unrecognizable information,” such as a missing address number or misspelled street name, and advised hosts to urgently contact Airbnb to correct those errors.

But the nature of application errors specific to individual applicants hasn’t necessarily been made clear. The Tribune relates the stories of some of the city’s recently disbarred Airbnb hosts who have yet to receive a registration number despite having updated their applications – and others who dispute having submitted incorrect information in the first place.

Rosa Escareno, commissioner of the Chicago Department of Business Affairs and Consumer Protection, or BACP, attributes blame for the city’s possession of inaccurate data to Airbnb. “We’ve been working with Airbnb in good faith to address this issue over this past month, over this past year,” Escareno told the Tribune. “They have failed to address the issue.”

However, the regulatory framework under which Airbnb and its users operate is overly burdensome and complex.

In 2016, Chicago passed an ordinance that tightened regulations on short-term rental services and their users. The ordinance required platforms such as Airbnb to obtain a license before operating in the city and report updated user data to local officials twice a month. The measure also established a cumbersome registration process that requires Airbnb to register listings with the city on hosts’ behalf, giving way to confusion and routine miscommunication between parties, which can risk steep fines.

The rollout of the registration process imposed by the ordinance, which went into effect in 2017, was riddled with errors and delays. Having been on the books for more than a year, the system’s impact on the industry may speak for itself: Airbnb is currently one of only two licensed short-term lodging services in Chicago, according to the Tribune. And similar platforms such as TripAdvisor have since suspended their operations in the city altogether.

The ordinance also imposed onerous fees and surcharges on short-term rental services, in addition to a troubling provision that allowed local authorities to search hosts’ private residences “at any time and in any manner” without a warrant or probable cause. Concerns over the constitutionality of this search provision led to the case Mendez v. city of Chicago, brought by the Liberty Justice Center and Goldwater Institute, which resulted in the city amending its ordinance to exclude that invasive overreach. The Liberty Justice Center is the litigation partner of the Illinois Policy Institute.

Chicago’s heavy regulatory hand with short-term rental services speaks to a broader attitude toward ingenuity and entrepreneurship that local lawmakers ought to reassess. The city’s arbitrary – and protectionist – restrictions imposed on mobile food vendors has decimated its once-burgeoning food truck sector.

While Chicago officials propose raising the minimum wage or adopting failed income-redistribution models to promote economic mobility, they seem all too eager to constrict the startups and businesses that offer exactly that. Chicago is a city characterized by drive and creativity – and officials would be better off boosting, rather than shunning, those virtues.