Hotel Accommodation Fees Up 8.5% Last Year, 6.7% This Year
Impact of Airbnb Regulations and Increase in Tourists
One in five hotels in New York, USA, is being used as a shelter for undocumented immigrants, leading to a surge in hotel accommodation costs in New York, according to an analysis. The sharp rise in inflation, regulations on New York City's accommodation sharing service Airbnb, and an increase in tourists also appear to be driving up hotel prices.
According to the New York Times (NYT) on the 26th (local time), 135 out of 680 hotels in New York, or 20%, are being used as shelters for undocumented immigrants.
New York City is required by a 1981 court ruling to provide free shelter to refugees. Accordingly, the city pays hotels between $139 and $185 per room per night to use them as immigrant shelters. Since 2022, more than 180,000 immigrants have flocked to New York City, causing a sharp increase in hotels used as shelters.
According to commercial real estate market research firm CoStar, as a result, an estimated 16,532 hotel rooms available for tourists have disappeared. The number of hotel rooms available to tourists is 121,677, which is 2,812 fewer than the pre-COVID-19 pandemic level.
Consequently, hotel prices in New York City are also rising. According to CoStar, the average daily hotel rate in New York City in 2023 was $301.61, up 8.5% from $277.92 a year earlier. The upward trend continues this year as well. During the traditional low season in the first quarter, the average daily hotel rate in New York rose from $216.38 last year to $230.79 this year, an increase of 6.7%.
New York City's newly introduced regulation on the accommodation sharing service Airbnb is also fueling the rise in hotel prices. Since September last year, New York City requires hosts renting out homes for less than 30 days to register their personal information with the city government and imposes taxes based on this. However, due to the tax burden, many hosts avoid registration, causing a sharp decline in Airbnb accommodations available to tourists. According to market research firm AirDNA, the number of Airbnb listings available for stays under 30 days in New York City was 3,705 as of March this year, an 83% decrease compared to 22,247 listings in August last year, one month before the regulation was implemented. Since Airbnb accommodations have accounted for more than 10% of the total lodging supply in New York City, this is analyzed to have contributed to the recent rise in hotel prices.
Daniel H. Lesser, CEO of LW Hospitality Advisors, said, "If you want to book a hotel in Midtown Manhattan from Tuesday to Thursday during peak season, you will have to pay a huge cost," adding, "Everything is related to supply and demand, and the immigrant issue has reduced supply."
Meanwhile, the surge in undocumented immigrants is also causing a sharp increase in social costs for Americans. New York City currently provides shelter and other services to 65,000 immigrants and expects to spend more than $10 billion over three years on this issue. Public safety is also deteriorating. In the upcoming U.S. presidential election in November, the issue of undocumented immigration has emerged as a key factor influencing voter sentiment in battleground states that could determine the election outcome.
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