Airbnb finds SF hostel territory By Carolyn Said

Polaroids of guests at the Treat St. Clubhouse, a hostel-style Airbnb.

Zain Memon, 28, and Duncan Graham, 26, both tech workers, wanted a way to afford San Francisco’s astronomical rents.

So they tried an experiment. They rented a four-bedroom house in the Mission two years ago. After each taking a bedroom, they packed the other two rooms with eight bunk beds, listing their Treat St. Clubhouse on Airbnb for $55 a night per bed.

“We’re renting out at cost to provide an affordable place for locals and visitors to stay,” said Memon, who met his girlfriend Marion, a native of France, when she stayed there last year. “We’ve made lifelong friendships.” It was so successful that last year they rented another flat to turn into a hostel, calling it the Sunnyside Travel House. “It has a more wholesome and chill vibe; Treat St. is more rowdy and more of an anarchy house,” he said.

At Sunnyside, located in Japantown near Alamo Square, they installed two resident managers and put 10 bunk beds in the other two bedrooms.

“In summer we’re really full,” said Hana Nobel, one of the two Sunnyside managers who have their own rooms in exchange for cleaning, laundry, stocking supplies, greeting guests and handling inquiries. She doesn’t get paid but most weeks she feels like it’s a fair exchange. “It’s mostly tourists; people here for conferences; some who are visiting friends,” she said.

Sunnyside and Treat St. Clubhouse are among dozens of informal Airbnb hostels that cram visitors into houses and apartments at rates ranging from $50 to $80 a night per bed. The site’s worldwide reach and help with scheduling and payment processing simplifies running these hostels.

Home-based hostels appear to be on the rise this year, with 27 Airbnb hosts offering two or more shared rooms, for a total of 220 listings. Last year, 13 hosts listed 107 shared rooms; in 2014, there were 58 shared rooms in hostels. (These numbers exclude hosts who offer just one space in a shared room.)

Conversely, the number of hosts with multiple homes declined significantly, after Airbnb said it would jettison those who appeared to be illegal operators.

If the hostel-like rentals have a permanent resident and register with the city, they could be legal under the short-term rental law, said Kevin Guy, director of the Office of Short-Term Rental. However, home-based hostels still could violate planning, zoning and building code rules on density and safety, Guy and Scott Sanchez, San Francisco zoning administrator, agreed.

“There’s been an uptick in complaints over the past few years about these hostels on Airbnb,” Sanchez said, noting 49 complaints since October 2014, with 15 still active. “We’ve had cases where they changed the house rules to be more compliant.”

Basically, packing in a lot of people is OK if they are cooperative roommates who have a say in running the household, less so if it’s a top-down structure. If more than five unrelated people share a dwelling, inspectors look at whether they have control over the membership and composition, whether they purchase and prepare food collectively, and whether they determine their own rules and organizations, he said.

Some of the informal hostels seem to be big businesses.

HackerHomes consists of a dozen hostels for tech workers in apartments or houses from San Francisco to San Jose. The San Francisco Tenants Union, the Housing Committee of San Francisco and a neighbor are suing the chain and its proprietors.

Jennifer Fieber, the Tenants Union political campaign director, said the hostel residents, who pay $50 or more a night, are being exploited. “Nobody should be paying that much money to have no privacy and live in these conditions,” she said. She’s even sympathetic to the landlords. “In this situation (the HackerHomes proprietors) are rent-gouging the landlords, by renting for one price and then making a profit,” she said.

The Tenants Union’s attorney, Mark Hooshmand, said even though the hostels provide cheaper options for multiple people, “they are still removing long-term housing from the market (and are) makeshift solutions that violate the laws and operate under the radar.”

For Sunnyside and Treat St. Clubhouse, both landlords are aware of the hostel rentals, Memon said, and charge a slight premium because of the number of visitors. The hostels cover all the electricity and water costs, which are considerable. “We’re confident that we’re above board and legal,” Memon said, saying they registered with the city’s Office of Short-Term Rental. However, neither property appears in the city’s vacation-rental registry, something the partners weren’t able to explain.

Some quick math shows that Sunnyside would bring in $200,000 a year at full occupancy, or more than $16,000 a month – triple what it might command as a regular rental, even in San Francisco’s overheated market. Treat St. would generate $160,000 a year. But Memon, who said he doesn’t know the occupancy rate, said he and Graham don’t profit from the hostels other than covering their living expenses — in fact, they cannot legally make more than their rent, since the units are rent-controlled.

“Any month we’re over, we re-invest back in,” he said. “We’ll stock the fridge a little better. For a few months, we had kombucha regularly at Sunnyside. Treat is more of a party house, so we stock alcohol regularly, depending on how we’re doing.”