Last updated: 12:30 PM ET, Fri October 28 2016

What New Airbnb Regulations Mean for New York Hotels

Hotel & Resort Patrick Clarke October 28, 2016

What New Airbnb Regulations Mean for New York Hotels

PHOTO: Times Square in New York City. (Photo via Flickr/Aurelien Guichard) 

New York Governor Andrew Cuomo passed legislation earlier this month making it illegal in New York City to list entire apartments on Airbnb and other home-sharing services for fewer than 30 days.

Violators could be fined up to $7,500 for the third offense. However offenders won't be sought out. Instead, the Mayor's Office of Special Enforcement will take action once a complaint has been filed.

While the decision has been met with a lawsuit from Airbnb, the hotel industry is applauding the move to crack down on "illegal hotels" as they feel it levels the playing field. In a recent conference call with shareholders, LaSalle Hotel Properties CEO Mike Barnello went so far as to say that the law "should be a big boost in the arm for the business, certainly in terms of the pricing."

Although it remains to be seen how significant of an impact the new law will have on the hotel industry, it's difficult to foresee a scenario where hotels don't benefit in some way.

Hank Freid, CEO of the Impulsive Group — a New York-based hospitality company specializing in boutique hotels — points out that the regulations have the potential to increase demand for traditional hotels, thus paving the way for higher prices.

"With less Airbnb options, it can cause a supply and demand issue in terms of an increasing demand for hotel rooms, which in turn could drive prices up for hotels," Freid told TravelPulse. "However, currently in New York, pricing for hotels is actually the lowest that it has been in years, so regulations could help to balance out the market and help bring pricing back to where it was years ago."

Nonetheless, it's unlikely fewer Airbnb listings will be the deciding factor for travelers. 

"Airbnb is so vastly different from traditional hotels, and travelers who choose to stay in a hotel are often looking for a much different experience than if they were to stay in an Airbnb," added Freid.

READ MORE: How Does Airbnb Stack Up Against Hotels?

According to Freid, no legislation can change the one key asset hotels have working in their favor.

"Hotels will always have the advantage of the 'human touch,' which is especially appealing to luxury travelers," he tells TravelPulse.

"At my properties, including The Sanctuary Hotel in Times Square, we remember the preferences of our return guests, so we can always incorporate those human elements to their experience, such as remembering their favorite minibar choices to have in the room, or for our corporate guests, keeping their toiletries of three ounces or more in storage so they don’t have to travel back and forth with them."

With Airbnb having already dropped thousands of listings in New York this past summer and the San Francisco-based company's public affairs director Nick Papas referring to the hotel industry as a "price-gouging hotel cartel" in a recent statement, it's clear this rivalry will be ongoing.

But as Freid points out, travelers shouldn't be overly concerned with the new regulations.

"The regulations will mostly affect the people that are renting out their properties as Airbnb rentals more so than travelers," he added.