New 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 accommodate 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, they spend more as their income rises. However, this city refuses to embrace the industry or change its outdated laws that limit profitability and make operations a nightmare.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, Brooklyn is booming, and even Queens and the Bronx have seen 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 while 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 troubling history of fires in NYC, where they can spread rapidly and pose a major threat. See the Windsor Hotel fire—it's just tragic. The typical American's lack of understanding isn’t helping either. Hostels here have a connotation that often associates them 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 tried. There needs to be a major unified effort to push for change in this city, perhaps in a way never seen before. Imagine Hostelworld working with Booking.com and Expedia, along with Generator, St. Christopher’s Inns, Freehand, Equity Point, USA Hostels, and anyone else with a vested interest all coordinating efforts. This can work if they all come together and create a hostel lobby where their efforts can be focused. This lobby can hire a staff to consistently advocate for the advancement of hostels in NYC. It can engage local community members, politicians, and even developers, 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 erupted, and simultaneously, many hostels were shut down, leaving guests scrambling (see here...). It looked like a miracle happened when hotel revenue managers in NYC started comparing notes and realized their year-over-year (YoY) revenue had been dropping. For some reason, they looked for 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 grounds to act. Many of these hostels were technically illegal, but an old and outdated law made it difficult to determine exactly what constituted a hostel and where a hostel could operate. Some hostels were in residential locations, subleased rent-controlled apartments, or simply 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 fighting 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 offerings by having multiple sizes of dorms. A healthy hostel system in NYC will only advance the industry further. 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 immerse itself in the deep culture NYC has to offer. Eventually, NYC hostels will gain exposure in the media, attract new guests, and increase the number of new hostel venues across the country and the world.