New York City’s Airbnb Ban is Driving Up Hotel Prices
New York City put the kibosh on Airbnb. Now, hotels prices are skyrocketing this holiday season amid soaring demand.
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Forget the rent, the hotel prices are too darn high!
With New York City recently putting the kibosh on Airbnb and similar short-term rental platforms, demand for hotels has increased and prices are skyrocketing this holiday season.
The Double-Edged Sword
Property owners see Airbnb as a way to supplement income and help boost tourism. But a less positive side effect is seeing wealthy hosts accumulate multiple properties for vacation rentals that drive up property values to unaffordable levels and create housing shortages.
In a working paper from Harvard Business Review, researchers found that a 1% increase in Airbnb listings in any zip code caused a fraction of a percent increase in both rental rates and housing prices. That may seem small, but Airbnb’s average yearly growth is about 44%, and the study concluded that the rate contributes to about 20% of the average annual increase in US rents. Cities around the world have responded with stricter regulations:
- Starting in September, NYC required that: short-term rentals (units leased for fewer than 30 days) be registered with the city, hosts must be physically present during rental stays, and no more than two guests can rent out a property, regardless of size. Violating the rules can mean a $5,000 fine — you know, the price of a closet in Manhattan.
- Airbnb has seen its NYC listings fall a staggering 75% in the past two months, essentially eliminating it as a competitor to hotels, The New York Post reported. The average hotel room now goes for $530 per night, an almost 20% increase from Thanksgiving weekend, according to Trivago’s Hotel Price Index.
Fixer-upper: If more cities follow NYC’s lead, could this be the end of Airbnb? It also hasn’t helped that the company copped to cracks in its quality assurance. In an interview with Bloomberg, Airbnb CEO Brian Chesky said there’s been too many instances of customers paying for a rental property and it being far worse than what the listing offered. In some cases, the property didn’t even exist.