The Impact of Airbnb Crackdown on NYC Hotel Prices and Accommodation Availability

The landscape of short-term rentals in New York City has changed dramatically following the implementation of stringent regulations. These new rules, encapsulated in Local Law 18, have led to a significant reduction in Airbnb listings, resulting in higher hotel prices and fewer accommodation options for travelers.

New York City’s combination of reduced hotel supply and the stringent regulations on short-term rentals has created a perfect storm, pushing hotel prices to record highs. As tourism demand approaches pre-pandemic levels, travelers are facing higher costs and fewer accommodation choices. For policymakers and other cities, New York serves as a critical example of the potential pitfalls of over-regulating short-term rentals. The situation underscores the need for balanced regulations that address legitimate concerns without stifling the accommodation market and harming economic vitality.

Decline in Airbnb Listings

Airbnb postings in New York have seen a drastic decline due to Local Law 18, which went into effect in September. This law mandates hosts to register with the city, imposes restrictions on rental durations, and requires hosts to be present during stays. While intended to curb illegal hotels and short-term rentals, these regulations have effectively shut down many Airbnb units. Jay Carney, the global head of policy and communications at Airbnb, highlighted this issue, pointing out that such regulations are counterproductive and serve as a cautionary tale for other cities considering similar measures.

Surge in Hotel Prices

The crackdown on Airbnb has had a significant impact on hotel prices in New York City. According to Skift, hotel rates in NYC increased by 6.7% in the first quarter of 2024 compared to the previous year. Additionally, the average nightly rate reached $301 last year, marking an 8.5% year-over-year increase. This rise in prices is not solely due to inflation but is also driven by a supply crunch in the accommodation market.

Contributing Factors to the Supply Crunch

The reduced availability of short-term rentals is one of the key drivers behind the increase in hotel prices. Before the crackdown, short-term rentals provided about 10% of the city’s travel lodging. With most of these listings now eliminated, the demand has shifted to hotels, further driving up prices.

Moreover, the city has repurposed a significant number of hotel rooms to house migrants. About 135 hotels in the city, out of a total of approximately 680, are being used as temporary homes for migrants. This practice has removed roughly 2% of net hotel rooms from the market compared to pre-pandemic levels. These hotels, receiving steady income from the city, have not reverted to traditional tourist accommodations, exacerbating the supply shortage.

Economic and Social Impact

The economic activity generated by Airbnb guests, particularly in boroughs outside Manhattan, has diminished. Over 50% of Airbnb units were located outside Manhattan, contributing vitality and economic benefits to these neighborhoods. With these listings dwindling, local businesses are likely feeling the pinch, and travelers are now reconsidering their trips to New York due to the higher accommodation costs and limited options.

Barb is the president of NASTRA and has spent her professional career in hospitality and real estate. After acquiring her first short-term rental in 2018, Barb moved her focus to legal advocacy after she sued the city of Nashville over a permit issue. Over the last three years, she has mentored more than 2,800 new STR hosts and is the Community Leader for Airbnb in Nashville, as well as an Airbnb “Ask a Superhost” Ambassador. Barb has appeared on numerous radio broadcasts, television shows, and podcasts to talk about her love of hosting. She also manages and co-hosts a number of short term rentals across Tennessee and Arkansas. Barb and her husband Pat own a hotel brokerage, development and consulting company. Look for her upcoming podcast series, “Women of Airbnb.”

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