NYC ‘clearly hurting’ with loss of at least 15% of its hotel rooms to migrant shelters, ballooning costs for tourists

A staggering 121 New York City hotels have been taken off the market and converted into migrant shelters – raising concerns that a space crunch and pricier rooms will tank tourism.

Some 16,000 former hotel rooms now booked to help with the influx of migrants into the Big Apple as the room rate for actual hotels has soared past $300 a night.

“There’s no question that taking a massive supply of hotel rooms off the market is increasing prices at the hotels,” said Nicole Gelinas, a senior fellow at the Manhattan Institute, a conservative think tank.

She said it becomes an issue for middle-income people considering coming into the city for a weekend, and booking a mid-tier hotel.

“It just becomes too much for people to afford. It’s clearly hurting the tourism industry,” Gelinas said.

The extent of hotels lost was revealed during a hotel industry event Tuesday morning, with nearly 15% of the city’s 121,300 now off the market.

Another 6,000 hotel rooms closed altogether during the COVID-19 pandemic, according to an industry group. The potential of rising costs may be something the city can’t ignore for long.

“It’s a topic of discussion. We have concerns regarding our cost profile – including at our hotels,” Gary Lavine, finance chairman of the board of directors at the Jacob Javits Convention Center, said Tuesday.

But he added, “It’s not a crisis – yet.”

Although the space crunch may be squeezing consumers, The Post previously reported that the migrant crisis has a boon for many of the mid-tier and economy hotels that were reeling during the coronavirus pandemic.

By converting into migrant shelters, hotels getting a steady stream of revenue with the city filling all their rooms – 100% occupancy – and paying an average of $156 per room each day.

The Post reported last September that the city extended contracts with the NYC Hotel Association for three years at a massive price tag of $1.3 billion — nearly five times the original $275 million deal — just to pay rental fees to the vast network of hotels converted into emergency shelters.

Even boutique hotels in the heart of the Theater District are taking migrants instead of tourists.

The head of the New York City Hotel Association acknowledged that consolidation, the “compression” of the hotel market, is one of a number of factors contributing to the costs of hotel rooms.

“The higher cost of hotel rooms is partly due to compression but also in part due to inflation which is a deterrent for meeting planners looking to book New York City as a destination,” said Hotel Association CEO Vijay Dandapani.

“The nearly 18% occupancy taxes that are added to the room rate make the City even more uncompetitive, leading them to alternate destinations,” he added.

Dandapani emphasized that there is no “shortage” of hotel rooms, as the occupancy remains just about at 2019 levels for the same period.

The average hotel occupancy rate was at 89.6% in 2019 and even with the consolidation it was at 82% by the end of last year after a precipitous decline during the pandemic years, according to a recent analysis by Comptroller Tom DiNapoli’s office.

DiNapoli said the migrant crisis has clearly improved the hotel industry’s bottom line.

“The growth was boosted, in part, by hotels that partially housed asylum seekers. In recent months, the City has housed more than 60,000 asylum seekers on a monthly basis,” the analysis said.

“The City has housed a portion of these asylum seekers in mostly midscale and economy hotels throughout the City, spending an ADR [average daily rate] of $156 per room.”

The comptroller’s office also found that roommates had surpassed $300.

Mayor Eric Adams’ office claimed the migrant crisis has not negatively affected tourism. The city has processed more than 200,000 of asylum seekers since July 2022.

“When the Adams administration came into office, tourism was at the fourth-lowest level in over 20 years. But today, New York City is back — and last year, we had the fourth highest tourism in history, we are on track for roughly 64 million visitors this year, and we expect a full recovery with over 68 million visitors in 2025,” a mayoral spokesperson said.

“The return of tourists to New York City is reflected at hotels as well, where demand is up. New York City is safer, cleaner, and, as the numbers show, continues to be one of the most popular destinations in the United States.”

City Hall said hotel prices have been rising due to inflation as well as demand, a phenomenon happening in other cities – with spikes in costs for goods and services, as well as labor.

Officials even admitted that historically the Big Apple is the most expensive city in the mainland US.

Many of the hotels now accepting migrants were not doing well before the pandemic, the mayor’s office noted. Some – including the Roosevelt Hotel in Midtown – were closed.