New York City Hotels Thrive Amidst Crackdown on Short-Term Rentals

New York City’s hotels are experiencing a surge in business, with the recent crackdown on short-term rentals being cited as a major factor.

In December, New York recorded the highest occupancy rate among the top 25 U.S. markets at 86.6%, with average daily rates (ADR) jumping nearly 11% to $393, and revenue per available room (RevPAR) rising by 15.6%. This is in contrast to the national average RevPAR increase of just 0.3%.

The crackdown on short-term rentals, particularly those of 30 days or fewer, has significantly reduced availability in New York. Listings dropped from around 13,500 in August to under 3,000 in December, following the enforcement of a new law that made rental requirements more stringent for hosts.

Jan Freitag, senior vice president of lodging insights for STR, noted the correlation between the crackdown and the city’s strong hotel performance in December, which also benefited from high holiday-related demand and a return of international tourism.

For the first 20 days of January, New York’s hotels continued to perform well, with ADR increasing 6% from the same period last year to $212, compared to the national average ADR increase of 3.1%.

The impact of Local Law 18, which strengthened existing short-term rental legislation and emphasized mandatory host registration, was immediate. Short-term rental inventory shifted to “medium-term stay” accommodations, with the majority of rentals now operating as such.

Bram Gallagher, an economist with AirDNA, noted that while New York’s crackdown has been beneficial for hotels, it has also boosted short-term rental markets in surrounding areas like Jersey City and Newark, where demand was up 54% in December.

Airbnb has been critical of New York’s approach, claiming that hotel prices are at an all-time high and that the anticipated benefits of the crackdown on housing affordability and availability have not materialized.

Despite the success of the crackdown, the future of short-term rentals in New York remains uncertain. Some cities that initially implemented strict regulations have since softened them, allowing a subset of short-term rentals to continue operating.

For hoteliers, however, New York’s crackdown is seen as a clear victory, with other cities expressing interest in replicating its success.