Airbnb's Impact on NYC Hotels: Winners, Losers, and Dueling Forecasts of New Law

01.09.2023 - 20:55 / skift.com / Sean Oneill / Patrick Scholes / Richard Clarke

New York City’s short-term rental regulations could slash up to 70% of Airbnb’s 23,000 active listings in the city after September 5. Experts are divided on how the move might affect hotels, and their forecasts are foggy. Yet the analyses reveal interesting details about this critical lodging market regardless.

Key points:

Some analysts think hotels have reason to be optimistic.

“At the end of the day, if Airbnb supply actually comes down, it’ll be positive for many hotels,” said C. Patrick Scholes, who oversees equity research at Truist Securities for the lodging sector.

“Where Airbnb hurts hotels in cities the most is on so-called ‘compression nights,’ which is the professional way of saying high-demand nights, like New Year’s Eve or when Taylor Swift is in town,” Scholes said. “Those are the nights where hotels make their money.”

For example, a property that ordinarily charged $300 a night might have charged $1,200 on a super-demand night before Airbnb came along. But now Airbnb offers cheaper rooms, siphoning off demand. So the hotel can only charge, say, $800.

Some other analysts agree.

“In my view, Airbnb growth has had a far bigger impact on hotel pricing than demand,” said Richard Clarke, managing director at Bernstein Research. “In the years up to 2019, hotel occupancy increased every year, but pricing was impacted. This can be explained largely by the impact of Airbnb on compression nights, which dropped even as average demand increased.”

“I would, therefore, expect that hotels will refind much of that pricing power on the big event dates, and prices will skyrocket,” Clarke said.

But not everyone agrees. CBRE, which provides valuation and advisory services to hotels, has studied the market in New York City as closely as anyone, and it doesn’t expect an impact.

“New York is a very large market, and a slight decrease in Airbnb supply is not likely to be impactful,” said Edward Eschmann, director at the New York office of CBRE. “I do not expect any significant change in data, and we are not modeling any difference in our forecasts because of this ruling.”

Historically, it’s hard to detect a pattern in Airbnb’s impact on New York City, and other factors may be at play.

“Even as it was reported to increase room rental inventory in New York City by 9%, statistically, hotel statistics continued to remain quite strong through 2018 and 2019,” said Eschmann. “While the market flattened a bit then, that appeared to be a function of a significant increase of traditional supply of mid-market development in the second half of the decade after the great financial crisis, rather than an Airbnb effect.”

In addition, hosts may find other ways to list their properties.

“Enforcement will be a challenge for