Skift Take
New York hotels have faced a price crunch after the city lost about 10% of its travel lodging supply between new restrictions on short-term rentals and a program to convert many hotels into shelter for migrants.
New York City’s hotel rooms are hitting record prices. The main reason? A supply crunch. The city has essentially banned short-term rentals while also converting thousands of hotel rooms into lodging for migrants. A New York Times article this weekend highlighted the issue—here’s a closer look at the numbers.
Navigating regulatory environments will be one of many topics discussed at Skift’s Short-Term Rental Summit, which will be held in New York City on June 5.
The Numbers
- Average Rate Last Year: $301 a night last year, up 8.5% year-over-year.
- First Quarter 2024: Average nightly rate of $231, up 6.7% from a year earlier.
Key Driver: De Facto Ban on Short-Term Rentals
- Policy Shifts: New regulations have drastically reduced Airbnb listings.
Another Factor: Converting Hotels Into Migrant Shelters
- No Reversal in Sight. Hotels used as shelters receive up to about $300 a night from the city in some cases, Bloomberg reported. Given this steady income, none have reverted to traditional tourist hotels after joining the shelter program.
Demand Rebound
- Visitor Numbers: Tourism demand for hotels is approaching pre-pandemic highs. New York hotels were 81.7% occupied on average last year, the Hotel Association of New York City told the New York Times. However, that was still five percentage points shy of 2019’s occupancy.
Hoping for New Hotels
- Strong Hotel Construction. In good news, supply may loosen as new properties open. As of the end of last year, New York City had 44 hotel projects under construction, which could eventually add 7,338 rooms. The city had the greatest number of hotel projects in the works of any U.S. city, according to Lodging Econometrics.
The Main Takeaway
New York City’s mix of reduced hotel supply and the regulatory impacts on short-term rentals is creating a perfect storm that’s pushing hotel prices skyward.
