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Your Home Is Their Castle New York Habitat featured in The Wall Street Journal

The Wall Street Journal's New York Bureau
February1999

IT WAS A PERFECT MATCH.

Patrick Zerbib was planning a four-day vacation to New York City with his wife and wanted to avoid standard, overpriced hotel rooms. Meanwhile, owners of an East Village apartment were leaving for a long weekend and they were interested in picking up a few extra bucks.

So New York Habitat, a sublet agency, put them together, and for $90 a night plus an agency fee of $31 a night, the Zerbibs moved into a suite of two large rooms with a kitchen, embroidered bedspread, pictures on the walls, and a homey atmosphere.

They didn't get chocolate on their pillows, let alone room service, and they had to clean up after themselves. But the Zerbibs were enchanted. "That apartment had a soul," says Mr. Zerbib, a 45-year-old editor from France.

Straddling the tourism and the real-estate industries, a handful of property agencies around the country, like New York Habitat, are discovering an increasingly profitable niche: the very short-term sublet. Usually with a minimum rental of two nights -- but often with stays of not much longer-firms are leasing furnished, lived-in homes to tourists and businesspeople looking for a more interesting, and often cheaper, alternative to hotels.

LOOKING FOR A FIT

New York Habitat, a French-owned agency that specializes in short-term rentals and sublets, has seen its monthly revenue for very short-term rentals jump more than sixfold in less than four years, to $37,000 in September 1998 from $6,000 in May 1995. The company's gross income has jumped 40% each year for the past five years, according to owner Marie-Reine Jezequel. New York Habitat started in 1989 by catering to French tourists and businesspeople. Now, customers come from Germany, Finland, Sweden, Switzerland, Australia, the U.K. and even Brazil. And 70% are businesspeople and tourists from within the U.S.

The company has some 2,000 apartments available for short-term rentals in New York and it maintains a database of floor plans, pictures and detailed descriptions. To advertise these spaces, Habitat keeps an ad in the Village Voice, a weekly paper, and is featured in several tourism guides. But half of its business is done over the Internet.

This is how it works: Apartment owners or primary tenants interested in subletting contact Habitat. The agency then goes to the apartment, takes pictures and takes note of space, decor and price. If the requirements of prospective guests match an apartment's offerings, the agency matches them up. Habitat requires two references and keeps a copy of renters' identification. And to assist travelers, the company offers services like tourism tips and free legal advice.

Ms. Jezequel says Habitat has never been sued. But there have been snafus that the company has tried to help visitors resolve. "The problems we've had are not so much lawsuits," says Ignatius Chibututu, Habitat's in-house lawyer, "but we've found that certain subtenants have had difficulties getting their deposit back from the tenant or owner, so we act as mediator. We testify in court and we have fought lawsuits on the subtenants' behalf when they have gone back to their country and are unable to go to court themselves." But Mr. Chibututu says those disputes are rare, about 2%. In 1998, he filed four suits for clients who left the country, out of some 1,700 total renters.

Ms. Jezequel says Habitat has an "error and omission insurance applied to real estate" to cover mistakes made by her sales agents --for instance, if an agent forgets to share a piece of information about the apartment with a client. Other than that, the owner is responsible for anything that may go wrong.

CRASHING AT JULIA'S

The main selling pitch for the apartments is character and authenticity, whether the residence is an affordable downtown dwelling or actress Julia Roberts's studio near Central Park, which the agency had sublet for $3,000 a week until it was sold last month.

The illusion of being a local has its appeal to some customers. Some years ago, French tourists witnessed a burglary across the street from their sublet. "They were delighted," Ms. Jezequel recalls. "They told me, 'We feel like we are in the middle of a TV series, it's so New York!'"

Meanwhile, to real city dwellers, the short-term rental provides a good and convenient business opportunity. Lisa Kurbiel, a human-rights lawyer for the United Nations who often works in the Sudan, is rarely home in New York more than two months out of the year. So she sublets her penthouse studio on 58th Street and 6th Avenue in New York through Urban Ventures, a sublet agency, for five-day stays as well as longer periods. She makes $150 to $200 a night, which helps to cover the $1,000 monthly costs of the apartment --including taxes and utilities -- and pay for her own getaways.

Ms. Kurbiel, 30, never meets the succession of strangers who enjoy her wrap-around terrace, African textile wall hangings or the carved footstool she brought back from Somalia. "Some people leave thank you notes and little presents," she says, "others leave ashes on the floor."

She doesn't even mind if they snoop. She locks her personal items in a chest, the rest is fair game. Besides, Ms. Kurbiel does the same when they are gone. "I find out a little about the people by the food they leave in the fridge, the ticket stubs for Broadway shows.... I wonder, 'Did they have parties in my place?'"

Ms. Gilot is a news assistant in the Wall Street Journal's New York Bureau.