New York City stands to lose thousands of short-term rental units in the coming months, but that loss in supply doesn't necessarily translate to higher hotel demand.
HNN's Bryan Wroten spoke with Kelsey Fenerty, manager of analytics at STR, and Sean Hennessey, CEO of Lodging Advisors and clinical associate professor at the Jonathan M. Tisch Center of Hospitality at NYU, about the new short-term rental regulations that have gone into effect in New York City and whether they mean travelers looking to rent out an apartment will book a hotel room instead. It's too early yet for any data to give a definitive reading, but past and recent trends can provide some guidance.
Performance data shows there's may be a little pressure on rates, Fenerty said, adding she would expect more pressure on rate in the long term than on demand. Extended-stay hotels, which make up about 5% of supply in the city, have a similar guest profile to short-term rentals, so not every short-term rental guest will become a hotel guest.
"If you think of extended stay as only 5% of the total sample, you have to wonder how many of those people staying in Airbnbs were really actually considering staying in a hotel to begin with, so was there a lot of demand?" she said. "But even at the same time, that'll probably help allow some pricing power into the city if there is more demand, if there are more people looking for a place to stay."
Adding to that potential for pricing power are several hotels that have been removed from the system because they are being used for migrant housing, as well as changes in the city approval regulations for new hotels that will mean fewer new projects entering the pipeline, Hennessey said.
"We still have an overhang of lots of new hotels opening around town, but at some point that will diminish, and then you'll really see that there won't be much incentive to build new hotels until there's a significant step up in revenue and profitability in order to justify the financial economics of these projects," he said.