In late 2022, as thousands of migrants began arriving in New York, city officials scrambled to find places to house them. They found interested parties: hotels that were still struggling to recover from the fall in tourism caused by the pandemic.
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Dozens of hotels, from once-top-class facilities to more modest establishments, closed to tourists and began housing migrants exclusively, reaching multimillion-dollar deals with the City. The humanitarian crisis became an unexpected lifeline for New York’s hotel industry; hotels became a safe haven for tens of thousands of asylum seekers.
Two years later, the migration crisis has helped dramatically change the hotel landscape in New York. The conversion of hotels into shelters has sharply reduced room supply just as tourist demand has surged to near pre-pandemic levels and is projected to hit a record high.
Shelters for migrants —along with other factors including inflation, the loss of short-term rentals from Airbnb and an anticipated decline in new hotel construction— have driven the cost per night of an average room to record levels.
The average daily rate for a hotel stay in New York City rose to $301.61 in 2023, up 8.5 percent from $277.92 in 2022, reports CoStar, a commercial real estate data provider.
About 135 of the city’s roughly 680 hotels have entered the shelter-in-place program, many of them in Midtown Manhattan, Long Island City in Queens and near Kennedy International Airport — all traditional magnets for tourists.
Participating hotels are paid up to 185 per room per night. None have been converted into traditional hotels.
The use of urban hotels for migrants represents a loss of 16,532 hotel rooms, leaving 121,677 hotel rooms for travelers, CoStar reports. That’s 2,812 fewer rooms than just before the pandemic.
“It’s all about supply and demand,” said Daniel H. Lesser of LW Hospitality Advisors.
Some 65,000 migrants are being housed in hotels, tent dormitories and other shelters because of the city’s legal obligation to provide a bed to anyone who needs one. The city plans to spend $10 billion over three fiscal years.
With migrants occupying the city’s most affordable hotel rooms, mid-market tourists are likely to see the biggest price increases, said Sean Hennessey, a hotel industry consultant and clinical associate professor at New York University.
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