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Lack of youth hostels and the rise of Airbnb = NYC housing crisis

07 August 2015
7 Aug 2015 -
New York skyline

New York City is suffering from a severe affordable housing shortage and it has only gotten worse since 2010. A recent study by New York Communities for Change and the Real Affordability For All Coalition illustrates how Airbnb is exacerbating the affordable housing crisis in New York City.

What’s shocking is that 20 percent of all New York City apartment vacancies in certain communities are simply disappearing, with the East Village losing 28 percent to illegal hotel rooms on Airbnb.

The study revealed those apartments are instead being offered on average 247 days a year and rented 109 nights a year as unregulated hotel units; and that nearly 60 percent of 27,000 units listed were “whole apartment rentals,” meaning they are illegal.

As former chair of the New York State Assembly Ways and Means Committee, what’s most shocking to me is that the City and State of New York see zero tax revenue from these illegal hotels. That is simply a crime.

The seeds of this crisis sprouted in 2010 when an unintentional legislative act forced the shutdown of over 50 regulated youth hostels representing over two million bed-nights in the city. Lacking that inventory and without more affordable options, victims were made of unknowing tourists, our city’s scarce housing inventory, and travel-related tax revenue.

As more communities and building residents across the five boroughs are up in arms about illegal rentals under their noses, the New York City Council now has a sensible, although indirect legislative solution (Intro. 116) that just might begin to ease the housing shortage, by first legalising the construction, licensing, and regulation of a new generation of safe, urban youth hostels in city commercial districts. This can make a significant difference.

In 2014, cities including Boston, Chicago, Miami, New Orleans, and Washington, D.C., attracted hundreds of thousands of youth travellers (age 15-30) patronising a new generation of safe and affordable youth hostels. This happened as the old boarding house-style facilities many New Yorkers might think of yielded to the modern urbanism millennials demand.

The U.N.’s World Tourism Organization (UNWTO) identifies millennials as the next big hospitality market explosion. The U.N. says international youth travel will grow from $173 billion annually today to $320 billion by 2020, and soon command 25 percent of all international travel. Industry data finds those international youth hostel customers’ top destination is the United States, and the city they desire to experience the culture of most is New York.

These travellers may be pre- or post-college, alone or in a group, going to multiple cities where their budgets require lower-cost lodging to maintain their ability to afford several cultural experiences. Just think about the college kids you know, travelling through Europe or South America on a budget during a semester abroad. They likely did not stay at a single luxury hotel, unless of course mom and dad came to join for a week and pick up the tab.

So what option have these international youth travellers been left with in the Big Apple? They can either avoid New York City completely, or more likely find some cheap, albeit unregulated, unlicensed, likely unsafe and illegal place to stay. Enter Airbnb.

On the other hand, travel industry data reveals that tourists who travel the world and patronise hostels in their youth are more likely to return back to the cities they experienced favourably in later years, for business and vacation, and then it is their turn to finally patronise full-service hotels.

New York City should open its arms and eyes to this next, big, youth cultural and hospitality market – some of it happening around our city already.

Legalising and regulating modern youth hostels creates a free market incentive for companies that own and operate them to offer the highest quality, safest, and most welcoming facilities that fit well into the communities where they are located.

The U.N. is telling us that waves of young tourists are going to travel to New York. The question is, will New York allow them to continue renting out scarce apartments as illegal hotels, or will it follow the lead of other U.S. cities that recognise, regulate, and collect taxes from them as legitimate contributors to the hospitality economy?

Hon. Jerry Kremer is Chairman of Empire Government Strategies and served 23 years as a member of the New York State Assembly, including 12 years as Chairman of the Ways & Means Committee and served by appointment of the Governor on the Metropolitan Transportation Authority’s Capital Review Board and the Public Authorities Control Board. He is also a spokesman for Hostelworld, the globe’s largest reservation service in the hostel industry. Hostelworld does not own or operate hostels.

Source: Jerry Kremer, Gotham Gazette