New York City hotel prices hit yet another record high—thanks to a swell of migrants

The average price of hotel rooms in the Big Apple has reached a record $301, and there's very little prospect of it getting cheaper any time soon.

Much of this relates to how hotels are no longer welcoming tourists from around the world, but housing migrants in need of shelter.

Figures from CoStar show that 140 hotels in NYC are no longer open to travelers after a $980 million deal was struck to offer emergency accommodation.

According to The New York Times, each venue is paid up to $185 per room, per night—irrespective of whether it ends up getting used.

This income stream proved especially valuable as tourism struggled to recover from Covid. Fast forward to now, the sector has almost returned to pre-pandemic levels.

But with 16,500 rooms lost to housing migrants, a huge supply squeeze has emerged—one that's exacerbated further by a ban on short-term Airbnb rentals and a lack of new hotels being built.

Hotel industry advisor Sean Hennessey told the newspaper that it's vacationers on tighter budgets who are most likely to feel the pinch.

"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," he said.

Others argue that the Airbnb ban, which means apartments cannot be let for fewer than 30 days, is the main driver of inflationary pressure in hotel room rates.

The NYC hotel squeeze

Over the course of just seven months, almost 20,000 properties were taken off the market.

While this is good news for locals who have had to contend with soaring rents, an issue that has played out in cities worldwide, that's narrowed options for tourists even further.

Just 8,000 hotel rooms are expected to be added in the coming years as new accommodation is built, which won't be enough to offset the supply that's already been lost.

The contract that New York City officials signed with hotels giving shelter to migrants is due to expire at the end of August, and reports suggest it will be extended.

However, the deal could be terminated at short notice if the migration crisis improves.

If that happens, there are no guarantees that these venues will open their doors to tourists again. Some may permanently close, while others would need expensive refurbishment—costs that would ultimately be passed on.

When all of these factors are brought together, the issue of elevated pricing for New York is here to stay.