New York hotel rates likely to rise as Airbnb rentals disappear

Many Airbnb users with reservations in New York for Christmas are scrambling to find new accommodation.

The company announced plans to cancel and refund reservations for stays after Dec. 1, according to the Associated Press, after long-planned regulations aimed at cracking down on illegal rentals took effect Sept. 5 in the short term in the city.

The regulations, which have sparked an outcry among travelers and short-term rental owners, require Hosts must be present for stays of less than 30 days, with a maximum of two people staying in a unit at a time. Hosts must also register and get approval from the city – otherwise hosts and booking sites can be subject to hefty fines.

Travel industry website Skift estimates that Airbnb’s short-term listings in New York fell 77% between June 4 and September 10, likely pushing many people searching for new housing.

“Over the past week, we have seen the highest booking pace for the upcoming six-month period that we have seen since 2015,” said Kevin Davis, CEO of JLL Hotels & Hospitality’s Americas, at “Squawk Box”. Asia” Monday.

“Also, if you look at Google searches, over the last week, for New York hotels, they are up 24% over the 60-day period,” he said. “We’re seeing a huge amount of interest in people staying in New York hotels.”

New York hotel rates to increase

New York City has enough hotels to meet traveler demand, Davis said, citing an unprecedented supply of new hotel rooms in the city.

“Since 2020, 10,000 new hotel rooms have been delivered, and over the next two years, an additional 10,000 new hotel rooms will be delivered in the city,” he said. “So there are absolutely enough hotel rooms to accommodate all the tourists who want to come to New York.”

Airbnb crackdown in New York causes outcry among hosts and some owners

Still, with most short-term rentals excluded, Davis said hotel rates are likely to increase.

“The message for your viewers is that if they are thinking about coming to New York, they should plan to make the reservation as early as possible,” he said. “We expect prices are likely to increase, particularly as we go deeper into the year.”

Demand will also be boosted by a drop in U.S. airfares as airlines try to boost travel demand in the fall, Davis told CNBC’s Mandy Drury.

“In New York, for example, in August compared to July, rates were down 14 percent,” Davis said. “If you look at fares from major U.S. cities to New York, they’re down about 17%, so consumers are definitely seeing a reduction in airfares today.”

Training effect

From London to Paris and Dubai, cities around the world have regulated short-term rental markets.

But New York’s regulations go further than most, raising concerns that other cities could adopt similar measures.

“It’s certainly possible that they will follow New York City’s lead,” Davis said. “My best guess, though, is that they will probably see what happens over the next six to 12 months in terms of enforcement and what the implications will be for the city before they see similar types of legislation passed in other other cities.”

What we’re seeing right now in the short-term rental industry is, frankly, a correction.

Kevin Davis

CEO, JLL Hotels & Hospitality’s Americas

Stricter rules on short-term housing are on the table in the United States – in cities like Atlanta, Dallas and New Orleans, Davis said – as well as in places like Florence, Italy and Melbourne, in Australia.

During the pandemic, many owners marketed their properties on Airbnb to make money during a time of unprecedented demand for short-term rentals from leisure travelers, Davis said.

“What we’re seeing in the short-term rental industry right now is, frankly, a correction and a reversion to the mean,” he said. “Leisure travel is now starting to decline and, as a result, there is a slowdown in demand for short-term rentals in many markets.”

CNBC’s Chiew Tong Goh contributed to this report.

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