The price of hotel rooms in New York City is skyrocketing as thousands of rooms are diverted to shelter asylum seekers and the crackdown on Airbnb eliminates that option for some visitors.
For the four weeks ending Nov. 4, the average daily rate in New York City reached $362.70, up sharply from $291.22 for the same period in 2019, according to STR, the leading source of hotel financial data. The city saw a record 66 million tourists in 2019.
Rates are likely to continue to increase in 2024, with the average rate for the year exceeding $300 a night for the first time, says Sean Hennessey, a longtime watcher of the city’s hotel scene who is now an associate professor at NYU’s Jonathan M. Tisch School of Hospitality. “The city is benefitting from the post-COVID travel rebound, rooms lost to sheltering asylum seekers and the near-elimination of short-term rentals,” he said.
With the crucial holiday season approaching, all signs point to New York meeting or exceeding the 63.3 million visitors forecast by the local tourism bureau NYC Tourism & Conventions. That figure would represent a 12% increase from last year.
In Battery Park City, the Conrad New York Downtown’s leisure travel is back to 2019 levels, says general manager Chintan Dadhich. He notes that because occupancy has rebounded, the hotel is able to expand its offering of amenities, which makes guests more willing to pay high rates. For the first weekend in December, a couple staying Friday and Saturday night are being offered rooms ranging from $762 to $982 per night.
Meanwhile hotel industry experts estimate that some 10,000 hotel rooms are being used to house asylum seekers, which has boosted rates in two ways. One is simply statistical: By eliminating 10,000 lower-cost rooms, the average room rate is boosted. An even bigger factor is that the loss of lower-rate options allowed higher priced hotels to boost their rates, as a matter of supply and demand.
Airbnb says the new rules sharply limiting the ability of homeowners and renters to offer Airbnb rentals are clearly leading to higher rates. Even though the company is honoring reservations made before September, it notes that most Airbnb listings are made weeks not months in advance.
“Visitors to New York City have thousands of fewer rooms to stay right now, which is resulting in less choice and higher prices. The impact is likely to grow after December and especially during peak travel nights, such as on New Year’s Eve,” said Taylor Marr, housing Market economist at Airbnb.
The prospect for building new hotels to increase the number of rooms remains unclear. At the behest of the hotel workers union, Mayor Bill de Blasio pushed through a requirement that all new hotels must receive a special permit from the City Council. Experts say the Council is likely to approve hotels only if the developer agrees to recognize the union and since then only one new project has been proposed.
Rising hotel rates will help hotels, whose finances were battered during COVID, but long-term threatens to make New York City too expensive for some potential visitors. But the city’s attractions may be irresistible.
“Just think if we get a casino!” said Hennessey, only half facetiously. “With abundant marijuana shops around town, there’s hardly a whim we don’t cater to.”
