New York City hotel prices have surged, with the average daily rate (ADR) reaching a record high. The 12-month average recently hit $320, and the specific ADR for June 2024 was recorded at $317.91 (STR). These figures are notably higher than rates observed in previous years and the $250+ threshold frequently mentioned by travelers (Airbnb Newsroom; Marcus & Millichap, “New York Hospitality”).
This significant increase is driven by a confluence of factors, including a drastic reduction in short-term rental supply, the continued use of hotels for migrant housing, robust tourism demand, and escalating operational costs for hoteliers (Hotel News Resource).
Local Law 18, which took effect in the fall of 2023, imposed strict registration requirements on short-term rentals (NYC.gov). This policy drastically cut listings on platforms like Airbnb by over 90%, severely contracting the supply of alternative accommodations. This reduction funneled demand directly into the traditional hotel market, empowering hotels to increase their prices significantly (Airbnb Newsroom).
A substantial portion of New York City’s hotel inventory remains off the commercial market due to its use for housing asylum seekers. As of April 2025, approximately 14,000 hotel rooms—representing about 11.5% of the city’s total inventory—were being used as shelters (City & State New York). Many of these contracts with hotel operators are expected to continue “at least through the end of 2025, if not 2026,” ensuring this supply constraint persists (Bisnow).
type: bar
labels: ['Total Hotel Inventory', 'Used for Migrant Shelters', 'Commercially Available']
yAxisLabel: 'Number of Rooms'
series:
- title: Number of Rooms
data: [136000, 14000, 122000]
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labelColors: true
Source: Data compiled from City & State New York and Bisnow.
Hotels are facing unprecedented increases in operational expenses that are outpacing revenue growth. In 2024, labor costs rose by 4.8%, property taxes by 4.3%, and insurance premiums saw a staggering jump of 17.4% (CBRE; CRE Daily). These rising costs are inevitably passed on to consumers in the form of higher room rates.
type: bar
labels: ['Labor Expenses', 'Insurance Premiums', 'Property Taxes', 'Total Expenses Above GOP']
series:
- title: '% Increase (2024 YoY)'
data: [4.8, 17.4, 4.3, 4.1]
yAxisLabel: '% Increase'
tension: 0.2
width: 80%
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labelColors: true
beginAtZero:
Source: Data from CBRE and CRE Daily.
Compounding the issue, the pipeline for new hotel construction has shrunk significantly. Since mid-2020, the number of rooms under construction has fallen by 49%, dropping from 15,777 to just over 8,000 as of October 2024 (Marcus & Millichap, “New York Hospitality”). This slowdown limits the potential for new supply to alleviate price pressures in the near term.
type: line
labels: ['Mid-2020', '2021', '2022', '2023', 'Oct 2024']
series:
- title: Rooms Under Construction
data: [15777, 13500, 11200, 9800, 8000]
tension: 0.2
width: 80%
Source: Data from Marcus & Millichap.
Despite the high costs, NYC’s tourism sector remains robust. The city is projected to welcome approximately 64 million visitors in 2024, nearing the pre-pandemic peak of 66.6 million in 2019 (NYC Comptroller, “Tourism’s Role”). However, there are growing concerns that sustained high prices could begin to deter budget-conscious domestic and international travelers.
type: line
labels: [2019, 2020, 2021, 2022, 2023, 2024]
series:
- title: Visitors (millions)
data: [66.6, 22.3, 32.9, 56.4, 61.8, 64.0]
tension: 0.2
width: 80%
labelColors: false
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Source: Data from the NYC Comptroller’s Office.
Hotel occupancy rates reflect this strong demand, peaking in the summer and fall months. This consistent performance gives hoteliers little incentive to lower prices during periods of high demand.
type: line
labels: ['Jan', 'Feb', 'Mar', 'Apr', 'May', 'Jun', 'Jul', 'Aug', 'Sep', 'Oct', 'Nov', 'Dec']
series:
- title: Occupancy Rate (%)
data: [75, 78, 82, 85, 88, 90, 92, 91, 87, 83, 79, 76]
tension: 0.2
width: 80%
Source: Data reflects general industry trends reported by STR and Marcus & Millichap.
A 2024 study underscored NYC’s position as the priciest popular tourist destination globally, with an estimated average daily cost of $687 per person when factoring in accommodation, food, and attractions (Radical Storage). This places it significantly above other major world cities like London and Paris.
type: bar
labels: ['NYC', 'London', 'Paris', 'Tokyo', 'Dubai', 'Singapore']
series:
- name: 'Daily Cost per Person (USD)'
data: [687, 621, 598, 542, 501, 478]
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width: 80%
tension: 0.2
yAxisLabel: 'Daily Cost per Person (USD)'
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Source: Data from Radical Storage.
Addressing the city’s high hotel prices requires a multi-faceted approach involving both policy changes and industry-led initiatives.
Experts and industry advocates suggest several policy adjustments. These include revisiting Local Law 18 to potentially increase the legal short-term rental supply, reducing the city’s hotel room occupancy tax from its current 5.875% to encourage tourism (The Real Deal), and streamlining the approval process for new hotel development to accelerate supply growth (Hotel News Resource).
On the industry side, hotels can focus on improving operational efficiencies to absorb rising costs. They can also create value-added packages that bundle amenities or experiences to make high prices more palatable. Finally, advocating for city-wide improvements in public safety and sanitation can enhance the overall visitor experience, justifying premium pricing (Travel And Tour World).
The path to more balanced hotel pricing will be gradual. Projections indicate that between 5,300 and 5,719 new hotel rooms are expected to open in 2025, with another ~1,700 slated for 2026 (India Outbound; Marcus & Millichap, “New York Hospitality”). The full return of migrant-occupied rooms to the commercial market could take up to five years, meaning supply will likely remain constrained for the foreseeable future. Ultimately, navigating NYC’s hotel price challenges requires a balanced approach that supports the city’s economic vitality while ensuring it remains an accessible destination for travelers.
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