Airbnb causes significant decline in NYC hotel occupancy tax income

A new report from the American Independent Budget Office has shown that income from hotel occupancy tax in New York City has dropped by $14m in one year. The report suggests that hotel occupancy tax will generate $546m over the 2016 fiscal year, reflecting the $14m drop from the previous year: the first drop seen since the recession in 2009. The budget office report specifically mentions competition from services like Airbnb as a contributing factor to losses.

Revenue from the city’s hotel tax is expected to drop for the first time since the 2009 recession — and Airbnb is partly to blame, according to the Independent Budget Office.

The IBO said in a report that the hotel-occupancy tax will generate $546 million in fiscal 2016, down about $14 million from the prior year.

New York City fiscal years end on June 30.

“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.

The hotel tax is 14.75 percent of the price of a room, and state and city sales taxes add another $3.50 a night to the cost.

Airbnb has offered to collect occupancy taxes on its rentals, but that would require city and state lawmakers to change current laws, a move that would legitimize the home-sharing service.

A company spokesman, Nick Papas, challenged elected officials to say if they would support giving Airbnb the authority to collect the taxes for the government or “are continuing to speak out of both sides of their mouths.”

City Council member Helen Rosenthal (D-Manhattan), who has fought against illegal rentals advertised on the site, said she expects that the recent addition of $10 million in enforcement initiatives will help deal with the situation.

“I’m confident that the additional pressure from government regulation will decrease the number of illegal rentals posted on Web platforms such as Airbnb,” she said.