Airbnb to blame for decline in hotel tax revenue

City collected $546M in FY 2016, down $14M from prior year

Dec.December 27, 2015 09:00 AM

City revenue from the hotel tax is down for the first time since 2009. And wouldn’t you know, controversial home-share service Airbnb is partially to blame.

The Independent Budget Office said the hotel occupancy tax will generate $546 million in Fiscal Year 2016, a drop of $14 million from Fiscal Year 2015, according to the New York Post.

“The strong value of the dollar, further additions to the supply of hotel rooms and competition from Airbnb contribute to lower occupancy rates and downward pressure on room rates,” the IBO said.

Airbnb has said it would be willing to collect occupancy taxes on listings, but city and state officials have rebuffed Airbnb, as doing so would require changes to the current laws, thus legitimizing the company.

The startup has been targeted by city council officials in recent weeks, with some proposing that any illegal listing be subject to fines upward of $7,500. City Council member Helen Rosenthal says she hopes that the addition of $10 million in enforcement initiatives would help curtail illegal rentals posted online.

The Real Deal performed a back-of-the-envelop analysis of Airbnb in the fall and found that the service pushes up rents in the most desirable neighborhoods. [NYP]James Kleimann

Correction: A previous version of this post incorrectly characterized Council member Helen Rosenthal’s statement on Airbnb. The council member said she thought that $10 million in new enforcement initiatives would curtail illegal listings, not that new fines could add $10 million in revenue.

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