Airbnb combats surge in party houses as Covid-19 shuts US nightclubs

New York

WHEN the novel coronavirus pandemic shut down bars and concert halls in March, a new phenomenon was born: the vacation-rental nightclub.

Professional party promoters started scanning Airbnb, Vrbo and other short-term rental sites for mansions and luxury condos for hire. Tickets were going for US$90 on Eventbrite and TikTok for soirees with bottle service and DJs.

"People were looking to escape from their own homes and came into our tiny neighbourhood to party all day, every day," says Kristen Robinson Doe, a resident of a quiet suburban Dallas neighbourhood where a party pad was being rented out for more than US$1,000 a night.

The five-bedroom home, with a resort-style pool, hot tub, outdoor kitchen and mini-golf putting green, was booked back-to-back through the summer. Ms Doe watched in disbelief as strangers streamed through the gates every weekend and danced until dawn, unmasked, inebriated - and in clear violation of social distancing protocols.

Host Compliance, which gathers data on short-term rental properties in more than 100 cities in the US, found a 250 per cent spike in complaints from June to September, compared with the same period last year.

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Party promoters quickly figured out "they can rent short-term rentals, create one-night nightclubs and make a lot of money from it", says Ulrik Binzer, chief executive officer of Host Compliance, which helps municipalities navigate home-sharing rules. Selling tickets for house parties on Eventbrite and Instagram is "something we've never seen before", says Mr Binzer, who has worked in the industry for five years.

Airbnb and Expedia Group's Vrbo have tried to crack down. Despite strict enforcement measures, the companies are struggling to curtail the events. If a listing is banned from Airbnb it can often still be available on Vrbo and other sites, and vice versa. If a host - or guest - is blacklisted, he or she may rent another property under another person's name.

Some professional party organisers even tell attendees to meet at a public location and ferry them to private homes so the address is never published online. Within half an hour, an empty house on a residential street can turn into a full-blown discotheque. The spike in rental revelries comes at a bad time for Airbnb in particular. The San Francisco-based startup is planning to go public in December and hopes to raise as much as US$3 billion, according to people familiar with its plans.

Airbnb had originally intended to list earlier this year but the project was jeopardised after Covid-19 shut down global travel and reservations plummeted. Recently the company has seen bookings return as people seek refuge in rural areas outside of Covid-19 hot spots and settle down for longer stays, taking advantage of flexible work options.

The rebound in Airbnb's fortunes helped get the IPO back on track. But headlines involving police, forbidden parties and a deadly disease aren't the image the company wanted to project.

"Reputation issues can spook people, from investors to the banks underwriting the deal," says Maurice Blanco, partner and co-head of Davis Polk & Wardwell's global Capital Markets Group. "Investment banks are concerned about being associated with a company that raises red flags."

Party houses were around before Covid-19. They drew national attention last year after a fatal shooting on Halloween at an Airbnb in Orinda, California, left five people dead. That prompted Airbnb to ban party houses and boost efforts to combat abusive host and guest behaviour. "We must do better, and we will. This is unacceptable," chief executive officer and co-founder Brian Chesky tweeted at the time.

Airbnb rolled out new safety policies and risk-detection technology to hunt down nuisance listings. It removed rule violators from the site and launched a "dedicated party house" rapid response team and a complaint hotline for neighbours.

Vrbo also has a "no tolerance" policy and a group tasked with ferreting out the guests who throw unauthorised parties and the homeowners who knowingly allow them.

"There have been rare occasions of someone abusing the platform and we remain committed to helping our partners protect their properties with education on how to prevent bad actors from renting," a spokesman for Vrbo said.

But a summer of novel coronavirus restrictions in cities has proven a challenge for enforcement. Police across the country began fielding calls early in the season about suburban party-goers terrorising neighbourhoods. Complaints included drunk revellers urinating off balconies, setting hillsides alight with fireworks and even spitting at neighbours, claiming they had Covid-19.

In response to a spike in complaints, Airbnb bolstered its party-house policy in August, capping occupancy at 16. It also expanded prohibitions on people under 25 from making one-night reservations in the area in which they live.

Airbnb uses an automated system to flag potentially problematic reservations for manual review and as a result has been able to identify and proactively cancel almost 9,000 "high-risk reservations" in the US and Canada. Separately, a team of 60 Airbnb agents trained specifically on party house take-downs have suspended more than 380 listings since August, according to Airbnb spokesman Ben Breit.

The Dallas party house was one of them. It had already been blacklisted from Airbnb in January, after racking up complaints on the neighbour hotline, Mr Breit says.

Before the suspension was over, the house became available again on the site under the name of a new property manager: Kristin Gerst. "What I saw when Covid-19 hit - and all of us short-term rental owners saw - was a plethora of low-class guests who disregard house rules," says Ms Gerst, who has managed short-term rentals in Dallas for three years and took over the property in February.

One particularly egregious party at the Dallas listing was planned by a woman who said she wanted to reserve the house for her sister's baby shower. In reality, she was hunting for a venue for the "Labor Day Mansion Party", which was advertised on Eventbrite, offering bottle service and DJs. Neighbours saw people carrying turntables into the backyard and boxes of spirits delivered to the front door.

Hundreds of people piled inside. Once the party was in full swing, Ms Gerst called the guest, who turned her phone off. She then asked Airbnb for help; the company cancelled the reservation and permanently removed the listing from the platform. Ms Gerst also tried the police, but it took five hours for them to arrive. "I've never felt so helpless," she says, adding she's now hiring a security company for backup.

While banned from Airbnb, the house was available on Vrbo until Oct 6, when Bloomberg News inquired about the property. BLOOMBERG