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San Francisco to Airbnb: Please Help Us Fight Illegal Hotels

Downtown San Francisco stands in this aerial photograph in San Francisco, California, U.S., on Monday, Oct. 5, 2015. Photographer: David Paul Morris/BloombergDowntown San Francisco stands in this aerial photograph in San Francisco, California, U.S., on Monday, Oct. 5, 2015. Photographer: David Paul Morris/Bloomberg
San FranciscoPhotograph by David Paul Morris — Bloomberg via Getty Images

After a failed ballot measure to crack down on illegal Airbnb rentals, San Francisco is now trying a different approaching: asking very nicely.

On Thursday, San Francisco officials sent a letter to a handful of home-rental companies, including Airbnb, Homeaway/VRBO (owned by Expedia), Craigslist, and Flipkey to plead for help in policing the problem, according to a San Francisco Chronicle report.

The request followed a November ballot measure that would have imposed stricter limits on short-term rentals in San Francisco. But it failed to pass, much to the relief of the companies targeted including Airbnb, which spent more than $8 million fighting the proposition.

San Francisco’s rule for short-term rentals are unchanged since officials last revised the city’s policy in July. Critics of short-terms rentals argue that, as is, the policies fail to prevent illegal hotels and that the city isn’t effectively enforcing the regulations.

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“As the first hosting platform to remit hotel taxes on behalf of our hosts, more than 92% of whom share only their primary home, we will continue to work with The City to ensure this new law works and middle class San Franciscans are able to share their homes,” an Airbnb spokeswoman told Fortune when reached for comment.

Although Airbnb works with the city’s tax office to ensure that hosts are paying taxes, the data doesn’t make it to officials in other agencies, making it more difficult to police illegal rentals. Airbnb also doesn’t require hosts to show their registration number, which hosts get by disclosing their rentals to the city.

San Francisco officials are frustrated by what they consider to be a lack of cooperation that makes it more difficult to enforce its rules for short-term rentals. They’re hoping that an appeal to home rental companies will yield some results.

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But for companies like Airbnb, complying isn’t entirely in their best interest. Providing customer data to the city could make hosts feel like their privacy has been compromised or that those who use their services risk being reported to the city.

There are also financial and business repercussions: forcing hosts to register with the city would mean slower growth because of the added steps required. Also, it risks alienating the most lucrative customers— hosts with more than one listing. They bring in the more revenue but are also flouting the rules. Hosts are only supposed to rent homes that are their primary residence.