New York’s campaign to attract businesses claims the state is “open for business!” This is comical coming from a government that has the nation’s second-worst business-tax climate, bans fracking, keeps ride-sharing out of upstate, and now criminalizes short-term rental advertisements. With Gov. Cuomo’s signing of the anti-Airbnb bill last Friday, the message is clear: New York is closed for business.
New York’s 2010 ban on whole-apartment rentals of less than 30 days is already antiquated in today’s on-demand economy, but this law makes matters far worse. People offering short-term rentals when they’re not in their apartments can be fined up to $7,500 simply for listing their properties on sites such as Airbnb.
The bill’s supporters claim that limiting short-term rentals will increase access to affordable housing. But there’s no way that an online platform that didn’t launch until 2008 is the culprit when it comes to the city’s decades-long struggle with high rents. The 41,000 active Airbnb listings in New York City come out to just over 1 percent of the city’s 3 million housing units. Such a small fraction of available housing can’t possibly boost rents in any noticeable way. And even these listings aren’t taking housing options from New Yorkers — 90 percent of Airbnb posts are for residents’ permanent homes.
Protecting the Cartels
This crusade was never about protecting New Yorkers from “illegal hotels,” but about protecting the hotel industry from competition. As Vijay Dandapani, the chairman of the Hotel Association of New York City, stated, the new law is “also protecting one of New York’s most vital economic contributors — the hotel and hospitality industry.”
The crusade against homesharing has never been about protecting New Yorkers from "illegal hotels," but about protecting the hotel industry from competition.Dandapani fails to note that Airbnb and other home-sharing options don’t simply poach hotel guests. Start with the cost: The average New York City hotel room comes to about $270 a night, far above many travelers’ budgets. Yet a quick search on Airbnb returns hundreds of options under the average price of a hotel, including a shared room in Williamsburg for $53 a night.
Sure, many of these rentals lack the amenities that hotels usually provide, but that’s the point. Not all travelers want a hotel experience. Airbnb listings are scattered all over the five boroughs and upstate. This creates opportunities to “live like a local” (an Airbnb slogan) and brings travelers into neighborhoods that usually don’t benefit from tourism spending. In other words, short-term rentals expand the proverbial “pie” of lodging options by offering travelers lower prices and more choices.
Nor is this an isolated incident of the state fighting innovation: New York officially banned fracking in June 2015. Technological advances had turned natural-gas deposits that were too costly to reach a decade ago into job-creating machines. Yet the Empire State continues to pass on the chance to gain the fracking-driven economic development that parts of neighboring Pennsylvania have seen.
Then, too, ride-hailing services like Uber are still unavailable outside the New York City area. This clearly harms residents, but benefits established taxi cartels.
On these innovative services, Cuomo is all talk, no action. He claimed he believed “Uber is one of these great inventions, startups, of this new economy,” and even said, “I don’t think the government should be in the business of trying to restrict job growth.” Yet that’s precisely Albany’s mode of operation.
Uber alone could create 13,000 work opportunities if allowed statewide, while fracking could add tens of thousands of new jobs. And short-term rentals provide a way for hosts to afford sky-high rents. The $5,500 in average income from Airbnb is why more than three-quarters of New York hosts say that this extra income helps them stay in their homes or apartments.
Tech continues to change the economy for the better. Uber, Airbnb and other online platforms open opportunities that simply weren’t feasible a decade ago. Fracking has proven to be a low-emissions way to spur energy production and create jobs.
In the face of this progress, New York policymakers have consistently shown their unwillingness to bring the state into the 21st century.
This attitude harms New Yorkers and does not bode well for the state’s economic future. While Cuomo and his allies in Albany may talk about creating a business-friendly environment, their anti-competitive actions show that New York is no place for innovators.
This first appeared at the Manhattan Institute.