A new economic study by Boston University Professor Dr. Michael Salinger in conjunction with Charles River Associates, which was commissioned by Airbnb, found proposed new short-term rental regulations would harm New York City’s economy and unnecessarily target short-term rentals that do not contribute to the housing availability or affordability problems.
The analysis demonstrated that short-term rentals provide important surge capacity during periods of high demand, allowing the city to maximize tourism activity at key moments. In addition, the report found short-term rentals promote tourism outside of traditional tourism districts and restricting them would harm the outer boroughs. Since most of the economic benefit of tourism is related to non-lodging activity, spending at museums, theaters, restaurants, retailers and on taxis would be impacted by limiting the number of tourists who can visit New York.
The study stressed that most Airbnb Hosts could likely earn more money renting their listings out on a long-term basis, indicating they are choosing short-term rentals for another reason and making it very unlikely that many of the short-term rental units subject to the rules will return to the available housing stock.
“These rules would have drastic implications for New York City’s economy without doing anything to increase housing affordability. The rules as they stand would hurt everyday New Yorkers who are just trying to get by in a city that has become increasingly unaffordable. There are more Airbnbs in the outer boroughs than in Manhattan, allowing visiting families to be close to their loved ones and experience a part of NYC outside of Midtown. Shops and small businesses in the Bronx, Brooklyn, Queens and Staten Island will hurt because of these new rules.”
Nathan Rotman, Regional Lead at Airbnb
Key Findings:
Targeting Short-term Rentals Does Not Create Affordable Housing: Because over 80% of the Airbnb listings in NYC could generate more earnings if rented on a long-term basis, hosts presumably have other reasons for not renting out their homes on a long-term basis. Discouraging hosts from offering their units on a short-term basis is unlikely to make them add their units to the supply of permanent housing.More than 50% of Airbnbs Are Outside Manhattan: An outright majority of hotels are located in Manhattan while less than half of the total Airbnb listings are situated in Manhattan. A significant share of Airbnb listings are in the boroughs of Brooklyn (37%) and Queens (13%). Airbnb Guests Help Local Economies: The presence of short-term rentals in boroughs outside of Manhattan has a positive spillover benefit on both tourism-related businesses and their employees, particularly in Queens where 14% of all labor income generated in 2019 was attributable to tourism.Airbnb Guests Have a Significant Impact on the Broader Tourism Economy: Around 72% of the $48 billion spent on tourism in the city in 2019 was related to non-lodging-related activities. Reducing the number of visitors does great damage to the tourism economy.Targeting Short-term Rentals Will Reduce Accommodation Capacity in NYC: Short-term rentals provide “surge capacity” to meet periods of peak demand, such as events like the NYC Marathon and major holidays. Not only are Airbnb occupancy rates high when hotel occupancy rates are high, they are disproportionately higher in these periods of peak demand.
The study’s author, Michael A. Salinger, is the Jacqueline J. and Arthur S. Bahr Professor of Management, Professor of Economics, and Chair of the Department of Markets, Public Policy, and Law at the Boston University Questrom School of Management and is the former Director of the Bureau of Economics at the Federal Trade Commission (FTC), where he played a major role in the FTC’s competition advocacy including around the impact of regulations on competition. The analysis utilized data from Airbnb, the Zillow Rent Index and the American Community Survey data. A copy of the full report is available here.
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