The lodging industry of New York City had suffered a serious blow from Airbnb last year. The negative impact on the lodging industry and the broader economy of New York City over the course of the last year was $2.1 billion, according to a report commissioned by the Hotel Association of New York City.The report was conducted by HVS Consulting & Valuation, a leading hospitality consulting firm.
The study titled “Airbnb and Impacts on the New York City Lodging Market and Economy” presents a wide range of New York City lodging industry impacts that exist due to the existence of the Airbnb lodging alternatives present in the market. It examined the direct impact of lost lodging revenue to the hotel industry over one year, which it estimates at more than $450 million over that time. It also looked at the impacts of Airbnb as it relates to ancillary departments of a hotel (food, beverage, etc.), projected losses to the construction sector, indirect and induced economic impacts on wages and lost jobs, and lost tax revenue.
The report concluded that over 2,800 jobs are directly lost due to a lack of ability to service Airbnb demand.The study estimates Airbnb costs more than $226 million annually in lost tax revenues for local, state and federal governments.
According to the analysis:
• In the fiscal year ending August 2015, Airbnb revenue surpassed $451
million, representing a nearly 5% share of the overall NYC lodging market.
• Given the trend line of growth and expected market dynamics, this revenue
level has the potential to grow to $800 million by 2018, intensifying the
impact on the NYC lodging market.
• The majority of this revenue growth will come from room nights, as rates
remain depressed and have less potential to expand in this product and
• The room-type inventory of Airbnb comprises a majority of units that
represent direct competition to the New York City lodging market. This
dynamic is not expected to vary over time given the consistency of the
overall mix of room types that has developed to date.
• The share of the overall market demand is now approaching a formidable
8%, a number that represents nearly 2.9 million room nights and growing.
The market as a whole is affected by over $2.1 billion, with the greatest levels of impact generated by loss of over $450 million in direct revenue and roughly $1 billion in potential new development investments. With the Airbnb revenue staged to potentially double in size, the report authors expect these impacts to grow proportionately and become a more significant and important factor in the competitive landscape of the New York City lodging market.Due to the availability of supply within the Airbnb sector, fewer rooms are needed within traditional hotels, thus limiting the ultimate incentive to build those rooms within the market.
In total, the analysis found that the overall impact of Airbnb’s operations in New York City is estimated to be $2.1 billion over the twelve-month period from September 2014 through August 2015.
A 2010 state law prohibits the short-term rental (less than 30 days) of apartments in New York City when the host is not present.
The Hotel Association of New York City, Inc. was established in 1878 and is one of the oldest professional trade associations in the U.S. Its membership includes more than 270 hotels in New York City, representing more than 78,000 rooms and 50,000 employees. http://www.hanyc.org/
SOURCE:Hotel Association of New York City, Inc./PRNewswire