New York City Airbnb hosts cancel guests due to new short-term rental laws, leaving them high and dry

The rule, titled Local Law 18, affects all platforms for booking short-term rentals, including Airbnb
ABNB,
+1.06%,
Booking.com
BKNG,
-1.20%,
Expedia Group’s Vrbo
EXPE,
-2.44%,
and others. Rentals for fewer than 30 days are not allowed.

Airbnb had already blocked calendars to prevent new reservations as early as Aug. 14, the company stated, in anticipation of the Sept. 5 deadline.

“To comply with the short-term rental regulations, we will be refunding all Airbnb fees associated with these stays after check-in occurs,” the company said. 

Theo Yedinsky, Airbnb’s global policy director, told the Associated Press that the New York City ordinance delivers a blow to “the thousands of New Yorkers and small businesses in the outer boroughs who rely on home sharing and tourism dollars to help make ends meet.”

“The city is sending a clear message to millions of potential visitors who will now have fewer accommodation options when they visit New York City: ‘You are not welcome,’” he added.

A canceled booking on the eve of their trip

Nehemiah Johnson, an airbrush artist with a side job as a pro-wrestling referee, and his partner were planning a week-long visit to New York City for the first time on Thursday. But they were left high and dry by their Airbnb host.

The Sacramento-based couple had been planning the vacation since before the coronavirus pandemic hit pause on those plans in 2020. They finally booked their flights and their Airbnb stay in November 2022. 

But on the eve of their trip, their Airbnb host abruptly canceled their booking, as new regulations curbing Airbnb stays took effect in New York City. They appear to be one of many guests whose reservations were nixed. Some people have complained about last-minute cancellations on social media.

That left him in a pickle: the average daily rate for a hotel room in the second quarter of 2023 hovered at $328. Hotel rates have risen by up 11% over the last year, depending on the number of stars, according to a recent report by PWC.

“It seemed like nobody wanted to do anything that helped,” Johnson told MarketWatch on Wednesday. He was not up to speed on the new law, so it came as a total surprise. “It was just crazy,” he said.

Airbnb, however, refunded Johnson the money he had paid, and gave him an extra $42 to cover the cost of accommodations, since he needs to re-book. He was one of the lucky ones: he and his partner ended up staying with a friend.

The struggle to find cheap accommodation

The Hotel Association of New York City, a trade group, acknowledges that finding safe and affordable accommodation in the city is a “difficult task.”

The rule will likely eliminate many Airbnb listings in New York City, experts said, which could impact prices of hotels and other accommodations.

New York City has around 23,000 “active” Airbnb listings out of which 4,100 are likely to be most affected by the change in the law, according to short-term analytics firm AirDNA, which analyzes property prices for short-term rentals.

These units produce roughly 40% of the revenue earned in the short-term rental market, the company estimated.

But the city argues that there are several issues with the prevalence of short-term rentals — such as an increase in complaints about noise, parties and pollution. Housing advocates in the city also argue that the rule is a way to address the ongoing lack of affordable housing in the city.

To be sure, New York isn’t the first city to make such a move: Several other cities — from San Francisco and Seattle to Santa Monica to Burlington, Vt — have moved to curb short-term rentals.

In the meantime, Johnson is looking on the bright side of having his Airbnb booking canceled the day before he was due to travel. “How many people were in the air when it happened?” he said. “It could have been worse, we could have been at a layover and got that email.”