New York blames Airbnb for drop in hotel taxes

Downtown NYC

New York, a city who's hotels have grappled with the impact of Airbnb, may finally have a reason to go after the home-sharing service. New numbers show that city taxes collected from hotel stays in New York have dropped or stalled in recent months, and fingers are pointing at Airbnb.

During a period from October 2015 through March 2016, revenue from hotel occupancy taxes dropped 4 percent, while sales taxes collected from hotel stays fell 1.3 percent during the first three months of 2016. This data, courtesy of the Independent Budget Office, found that hotel sales tax was the only tax associated with hotels that was in the negative while the rest rose by 4.4 percent.

Doug Turetsky of the IBO said in a statement that the drops are likely due to a "combination of things," including the rising popularity of home-sharing services such as Airbnb. These trends are not expected to turn around any time soon, and the IBO is predicting less than 1 percent hotel occupancy tax growth over the next five years.

FREE DAILY NEWSLETTER

Like this story? Subscribe to Operations!

Hospitality professionals turn to Operations as their go-to source for breaking news on guest rooms, food & beverage, hospitality trends, management, and more. Sign up today to get news and updates delivered to your inbox daily and read on the go.

Airbnb has had a tumultuous relationship with New York City, something one can easily tell by the city's $10-million investment in hunting down illegal hotels and its consideration to ban illegal hotel advertisements. However, Airbnb recently came to an agreement with the city of Newark, N.J., began paying taxes on rooms sold, and has voiced interest in coming to a similar deal with New York.

"We know that our community would contribute tens of millions of dollars to New York if given the ability to do so,” Airbnb said in a statement.

It's a common line from Airbnb that it is "willing" to pay taxes on room revenues, but it is slow to act on these statements and when it does it rarely matches what hotels pay. A recent report from the American Hotel & Lodging Association showed that between 2011 and 2015, unlicensed short-term rentals in Chicago paid zero hotel taxes and only began taking on a 4.5-percent tax February 2015. Meanwhile, Chicago hotels pay a 17.4-percent tax.

Suggested Articles

Lithuania’s capital city has a new hospitality initiative and its mayor is the first to step up—and out—for it.

The Accor brand's urban health retreat is surrounded by 1.2 acres of greenery within sight of the city's office towers.

Stan Group (Holdings) Ltd.’s Hotel Ease-Tsuen Wan has become a Certified B Corp., the first hotel in Asia to receive the trademarked certification.