Airbnb CEO: New York City hotels will get more expensive after short-term rental crackdown

The head of Airbnb, the world's largest vacation rental platform, issued a warning to travelers considering a trip to New York City over the next year.

Hotels are likely to get more expensive following what the company describes as a "de facto ban" on Airbnb in the largest city in the U.S., Airbnb CEO said last week at the Skift Global Forum in New York City.

"I was always hopeful that New York City would lead the way and that we would find a solution in New York," Brian Chesky said. "Unfortunately, New York is no longer leading the way. It's probably a cautionary tale."

New York City represented most of Airbnb's business about 14 years ago. That's no longer the case, and Airbnb now has its largest footprint in Paris. The company estimates its Parisian presence will grow even larger in the run-up to next year's Summer Olympics in the French capital.

Back in the U.S., it doesn't appear the company is getting as much of a welcome from various city governments. The New York City restriction on Airbnb limits stays to two guests and requires the host to be present in the rental for stays shorter than 30 days. The measure is believed to have eliminated as many as 15,000 — or about 70% — of Airbnb's listings in New York City, Wired reported using data from housing advocacy group Inside Airbnb.

That's bad news for travelers, per Chesky.

"I think the consequence of this is going to be that next year hotel rates will be more expensive, and the reason why is we're not going to be building 20,000 more hotel rooms," he added. "So, it's going to be more expensive to stay in New York, and I think that's unfortunate."

It's too early to determine if the Airbnb restrictions are the main culprit of higher hotel rates in New York City. While the city has seen rate surges in the weeks following the loss of so many listings, hotel data provider STR chalks this up to events in the city like New York Fashion Week, the U.S. Open and the United Nations General Assembly.

Airbnb vs. hotels

Regarding the Airbnb crackdown in New York City, Chesky didn't fully point the finger at the hotel industry. But he did indicate he felt there was some involvement by its lobbying groups.

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"I'm not an expert on that, and obviously they wouldn't tell me how much and how involved they were," he said. "I think that they were absolutely, you know, at the table."

But Chesky, like Hilton CEO Christopher Nassetta earlier in the week, indicated there's a difference in clientele and travel purpose at Airbnb compared to hotels.

Roughly half the nights booked off Airbnb are for stays longer than a week, and 80% of stays booked on the platform entail more than two guests traveling together, Chesky said. Travel styles like that are more conducive for a stay at a vacation home rental, the thinking goes.

"I never felt like for Airbnb to win, hotels had to lose," Chesky said.

But it is clear hotel companies feel a need to compete in some form or fashion in Airbnb's lane.

Hyatt announced a new vacation rental platform, Homes & Hideaways by World of Hyatt, the same day Chesky was speaking. That offering follows similar moves by Marriott, Mandarin Oriental and Accor in the last several years. Further, IHG is even offering 10,000 IHG One Rewards points to travelers who can prove their New York City Airbnb reservation was canceled in light of the new city policy.

"There is overlap. I'm not going to pretend there isn't," Chesky said. "But I do want to say there's less overlap than anyone realizes, and Airbnb allowed a whole bunch of people to travel that weren't traveling."

Airbnb's policy toward junk fees

Chesky highlighted how the company is moving to better disclose added fees like cleaning and service charges that make listings a lot more expensive at checkout than when you first search for a place to stay.

There is now a toggle over search results where a traveler can push to have listings show pricing totals incorporate everything charged short of taxes. The price inclusion isn't as default as it is with Marriott and Hyatt following their own respective criticism (and legal battle) over resort fees and so-called drip pricing. However, Chesky said the Airbnb website will remember you previously had the toggle on and keep that permanent for future searches.

Like what Hilton's Nassetta said last week, Chesky indicated support for transparent pricing — as long as everyone is doing it. This way, customers won't get the impression they're finding a better deal if they book off a third-party website that doesn't include all charges upfront.

"We want people to know that our prices are being shown differently than the competitors, but there may be a scenario down the road where there will be regulation," Chesky said. "If there's regulation, then it's a level playing field. But at this point, it's not."

Risk of overhyped AI

It's hard to go anywhere these days without hearing business leaders talk about the transformative impact artificial intelligence will have on the workplace and travel experience. Add Chesky to the camp of leaders who think it will still take some time to fully integrate into the travel experience.

The Airbnb leader indicated there isn't likely to be a massive shift in how travel operates in the next 12 months due to AI. Sure, it can help with customer service efficiency and things of that nature, but there are areas of opportunity — like with a digital concierge or destination matchmaker — that could enhance the booking process at Airbnb.

Chesky did offer another warning during his chat regarding a potential overhype of AI.

"I just want to remind people that we have to be careful about a fetishization of AI [and] of every new technology," he said. "A new technology comes around and then a whole bunch of people use a bunch of buzzwords … and they quickly launch these new gimmicks. We've never wanted to be one of those companies that launch AI gimmicks."

"It's going to take some time for AI to truly change travel and be great," he said.

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