New York Has Flushed Away $1.5 Billion

New York Has Flushed Away $1.5 Billion

Empire Government Strategies Chairman Arthur “Jerry” Kremer writes in The Huffington Post about the billions in tourist dollars that New York City has lost over the past few years. Current legislation before the New York City Council can change this and stop the loss of dollars from the City.

$1.5 Billion Flushed Away By New York Since 2010


New York City’s economy and nearly 360,000 members of its workforce rely on tourism for their jobs and income (*1). Yet it’s stunning that this month alone, the Big Apple lost out on over $23 million in local tourist spending, having nothing to do with the reasons one might expect (*2).

In 2014, a record 56.4 million tourists came to New York City, helping to generate jobs at theaters, hotels, restaurants, shops and in the transportation sector. So when the city recognizes a roadblock deterring thousands of new tourists each and every month, costing it more than $1.5 billion in lost revenue over the last 5 ½ years (*2), that issue needs to be addressed.

Last year cities including Washington, D.C., Boston, Miami, Chicago and New Orleans attracted hundreds of thousands of youth travelers, ages 15 to 30, at the expense of New York, largely because those destinations had already taken actions to adapt to an evolving tourism marketplace. That revolutionary change is documented by the United Nationals World Tourism Organization (UNWTO)(*3) finding that the international youth travel sector is growing rapidly from $173 billion per year currently to $320 billion by 2020, and will soon account for an astounding 25 percent of ALL international travel.

It’s for a peculiar and easily corrected reason, why New York City is missing out on this tourism boom. In 2010, the State of New York amended the city’s Multiple Dwelling Law and Administrative Code. An inadvertent casualty was the forced closure of about 50 youth hostels that hosted some two-million overnight stays each year (*4).

An immediate and drastic falloff happened because preferences and expectations of younger budget-conscious travelers differ from those on business or family vacation. The younger tourists may be traveling pre-or-post-college, alone or in a group, going to multiple cities where they require lower cost lodging that does not cut into their ability to afford significant cultural experiences.

So over the last 5 ½ years, youth travelers have simply avoided the Big Apple, because it lacked reasonably priced places for them to rest their heads at night (*5).

While the significant loss of local economic, job and cultural exchange is disturbing, the New York City Council and the Mayor have a new opportunity to bring new, affordable temporary tourist housing via a new law to legalize the construction, regulation and operation of properly sited, licensed youth hostels within commercial districts. What’s more, the opportunity to be located across all five boroughs should more evenly distribute the long-term economic benefits, which previously only Manhattan gained.

Time is truly of the essence, as travel industry studies show that tourists who patronize hostels in their youth are more likely to return to those cities in later years, for business and vacation, and will then stay in full-service hotels. It means, if our city gives these young visitors a favorable experience, they will return for more of the food, culture and great architecture that New York has to offer.

The international hostel industry has been growing steadily over the last several decades and in 2014 the United States was the number one destination for its customers, with in excess of 300,000 U.S. bookings (*6).

Once dowdy, boarding house style facilities long-ago gave way to a new modern urbanism that millennials demand, while cities that permitted the addition of such modern hostels have experienced a boom in tourism. If New York City follows that national trend, youth travelers will surely be its next big hospitality market dispersed across the city’s diverse landscape. The next move, “it’s up to you, New York, New York.”

Jerry Kremer is Chairman of Empire Government Strategies and served 23 years as a member of the New York State Assembly, including 12 years as Chairman of the Ways & Means Committee and served by appointment of the Governor on the Metropolitan Transportation Authority’s Capital Review Board and the Public Authorities Control Board. He is also a spokesman for Hostelworld, the globe’s largest reservation service in the hostel industry. Hostelworld does not own or operate hostels.

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*1 Source: NYC & Company, the city’s tourism and marketing organization.

*2 Source: Supporting the Regulation of Hostels in New York City. Page 6: “The value of the hostel sector to the City was in the order of $280M in 2014.”The 2014 $280M dollar value of the hostel sector was used to find the $23 million monthly loss to the Big Apple and the estimated 1.5 billion lost since 2010.

*3 Source: Youth Travel Market Research, analysis conducted by student marking which is an affiliate member of UNWTO.

*4 Source: Supporting the Regulation of Hostels in New York City. Page 7: “Since 2010 alone, approx. 50 hostels have closed down in New York City as a direct result of the legislation. We estimate that this has meant a decrease in excess of 2 million available bed nights in the city on an annual basis based on the bed capacity of these properties.”

*5 Source: Supporting the Regulation of Hostels in New York City. Page 8: “The impact of hostel closures is evident from recent data compiled by the company. Key trends include: Travellers increasingly choosing other destinations in the US over New York City.”

*6 Source: Supporting the Regulation of Hostels in New York City. Page 3: “The hostel industry has been steadily growing over the last several decades. In 2014 The United States was the number one destination for hostel customers with in excess of 300,000 bookings into U.S. hostel properties.”