New York City is grappling with soaring hotel costs after converting 20 percent of the city’s hotel room inventory has been converted into shelters for illegal immigrants and the homeless.
The New York Times states that out of the city’s approximately 680 hotels, 135 properties have been turned into city-run shelters to accommodate the massive influx of migrants arriving in the sanctuary city.
This drain on the hotel room supply, coupled with a rebound in tourism demand close to pre-pandemic levels, has created a supply and demand imbalance causing dramatic room rate hikes over the past year alone.
Average nightly rates in NYC hotels rose 8.5% from $277.92 in 2022 to $301.61 in 2023 after the city began housing large numbers of migrants in hotels, pricing out some budget-conscious travelers.
“I really believe it’s enabled two-, two-and-a-half-star hotels to be a little more emboldened, to take advantage of the situation and charge prices that perhaps they wouldn’t otherwise be able to,” said hotel industry advisor Sean Hennessey.
Some hotels were financially struggling pre-pandemic and have now converted lobbies into migrant processing centers to take advantage of NYC legally obligating itself to provide shelter to all illegal arrivals. The city pays the properties an estimated $185 per room nightly… even if vacant.
The temporary repurposing may impact some properties long-term according to one hotel association leader. “Some of them will not come back into the hotel industry, period,” after hosting migrants, Vijay Dandapani, president and CEO of he Hotel Association of New York City, said.
The situation has also fueled accusations of “coordination” at the border advising illegal immigrants to seek asylum through NYC’s immigration courts, which are far more accommodating than other jurisdictions like Texas.
As NYC contends with the surge through emergency hotel conversions, the impacts on its hotel industry and tourism economics have proven severe — and will carry long-lasting repercussions even if the crisis at the U.S.-Mexico border is fixed.