Fresh off the recreational marijuana policy which is costing legal business 10s of millions of dollars, New York City has entered into another policy debacle. It seems the the makers of policy in the Big Apple and Empire State live in a utopia where they can develop the best, most wholesome policy without any concern. Then WHAM, it is put out into the real world and becomes the subject for stand up comedy.
New York’s beleaguered rollout of a recreational marijuana marketplace was dealt another setback when a state Supreme Court justice issued an injunction that will block regulators from processing new applications for retail licenses under a program that the judge said is in “legal jeopardy.” After developing a policy, having buy-in from the cannabis business community, especially those holding medical marijuana license, it was all scrapped at the very last minute to become a free for all. This resulted in over 1,500 healthy, profitable unlicensed dispensaries opening in NYC alone, including near City Hall. And none paying city or state taxes.
Now the focus is short-term rentals in the New York City with a special target on AirBnB.
The city will begin enforcing its Short-Term Rental Registration Law Sept. 5, requiring short-term rental hosts to register with the Mayor’s Office of Special Enforcement. The law, which was adopted in January 2022, could significantly reduce visitors’ choices when it comes to lodging. Common sense says if you are going to start enforcing a law, you need to have the staffing to make it happen and ensure a smooth transition.
The number of short-term listings on Airbnb has fallen by more than 80 percent, from 22,434 in August to just 3,227 by October 1, according to Inside Airbnb, a watchdog group that tracks the booking platform. But just 417 properties have been registered with the city, suggesting that very few of the city’s short-term rentals have been able to get permission to continue operating.
Like the marijuana industry, rental hosts are being clever and also realize the understaffed city doesn’t really have much bite to their bark. Hosts are using social media to rent directly to customers (you can only imagine the results for some of those guests) and smaller sites are seeing an uptick with new registrations. The crackdown in New York has created a “black market” for short-term rentals, not unlike the marijuana industry.
The supply and demand of hotels and AirBnB have not changed, rather they have just partial become illegal. The end losers of the game, most likely tourism for the city.