The Industry

The Hostel Barriers in NYC

NYC Off Limits
Dennis Pitcock
Written by Dennis Pitcock

NYC Off LimitsNew York City is one of the largest tourist destinations in the world, yet it is light years behind in terms of hostels. NYC can easily hold a couple of for-profit mega hostels, yet none are in the space. Hostelworld has teamed up with some mega hostels and still no luck. Could the big apple be a ball and chain, slowing down the entire hostel industry?

The hostel ecosystem has proven itself to be lucrative in many sister cities to New York, where young travelers are initially exposed to the city, fall in love with it, and come back multiple times throughout their lives. Each time, spending more as their income rises. However, this city refuses to embrace the industry, nor change their outdated laws that limits profitability and operations a nightmare.

Apparently, you have to know many of the players to get into the game. In NYC, property can make money no matter what. Manhattan is practically untouchable, and Brooklyn is booming and even Queens and the Bronx have a boost. This is creating a frenzy for developers who are well connected in the city. These developers cater to their high bidders, which is why huge hotels and residential buildings are getting the go ahead, and hostels are left behind.

New York has a bad history of slumlords and shady accommodation practices for workers, students, and just about anyone. There has been a history of fire in NYC, where it can spread and be a major thread. See the Windsor Hotel fire, just tragic. The typical American’s lack of understanding isn’t helping either. Hostels here have a connotation and are often associated with halfway houses and shelters, and this negativity is spread in local communities, impacting zoning and inspection expectations.

The only way around this is to lobby, as Hostelworld has one tried. There needs to be a major unified effort to push some change in this city perhaps in a way never seen before. Imagine Hostelworld working with and Expedia. Generator, St. Christopher’s Inns, Freehand, Equity Point, USA Hostels, and anyone else with invested interest all coordinating efforts. This can work if they all get together and create a hostel lobby, where their efforts can be focused. This lobby can hire a staff to consistently seek the advancement of hostels in NYC. It can get local community members, politicians, and even developers on board, showing them that good hostels can contribute to the local economy and can make just as much per key as any hotel.

In 2010, a volcano went off, and simultaneously many hostels were shut down and guests were scrambled (see here…). It looks like a miracle happened where the hotel revenue managers in NYC started comparing note and realized their year-over-year (YoY) revenue has been dropping. For some reason they looked to the easiest excuse, hostels. Somehow, someone got the local government on board, and they went on a rampage. Evicting stranded tourists on a tight budget. It wasn’t nice.

They had the grounds. Many of their hostels were technically illegal, but an old and outdated law made it difficult to determine exactly what a hostel was and where a hostel could operate. Some hostels were in residential locations, subleased rent controlled apartments, or plainly not up to code. Even so, this government action was unwarranted, and they were way off in the blame game. In 2008 a company called AirBnB was created, and it really took off, building momentum in NYC in 2009, and gaining absurd traction in 2010 (see here…). That is a battle that the hotel industry and the city are still pursuing today, and luckily for AirBnB, they have the funds to support a lobby and a legal team to back them.

Now there are some hostels in NYC, and we mean no offense to them. They are doing a great job. However, there is a strong demand for a trendy Poshtel, and the ability for hostels to diversify their product having multiple sized dorms. A healthy hostel system in NYC will only advance the industry more. The big apple is always in the spotlight. When the rest of the city is able to witness a healthy hostel ecosystem, the hostel industry will only immense itself in deep culture NYC has to offer. Eventually NYC hostels will get exposure in the media, attract new guests, and increase new hostels venues across the country and the world.

About the author

Dennis Pitcock

Dennis Pitcock

Dennis jumped into the hostel industry after a summer backpacking Europe in 2008. He went from being a guest to a manager within weeks, and currently does consulting for large and small hostels alike in 3 continents. Prior, he worked in eCommerce, so he has passion for the tech side of the industry and is now deeply entrenched in the hostel and activities industry.

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