In recent news, it has been revealed that New York City's Sanctuary Hotel program, aimed at providing shelter to the homeless, undocumented migrants, and asylum seekers, is significantly impacting the hotel industry in the city. With 20% of hotel rooms currently under contract with the program, the limited availability of hotel beds has resulted in higher prices and increased occupancy rates.

According to reports, the Sanctuary Hotel program pays hotels between $139 and $185 per night, regardless of whether the rooms are occupied or not. Over the next three years, this program is projected to cost New York taxpayers a staggering $10 billion. However, while the program guarantees steady income for participating hoteliers, non-participating hotels are left to absorb the demand that would have otherwise been distributed across a wider market. As a result, hotel rates across the board have risen, leaving visitors to foot the bill.

This influx of migrants has compounded the existing issue of an overwhelmed city shelter system, as New York City faces an estimated influx of over 150,000 migrants, according to Mayor Eric Adams. However, official figures from The New York Times suggest the number is closer to 65,000. With limited improvement expected in the near term, city officials predict that the strain on shelter systems will persist.

Moreover, the reduction in available hotel rooms has also been impacted by the disallowance of short-term Airbnbs for less than 30 days. This has redirected visitors to hotels, further exacerbating the strain on the available accommodations. The decrease in short-stay homeshares alone amounts to over 15,000 properties.

While New York City taxpayers are shouldering the majority of the $10 billion commitment, visitors to the city are indirectly contributing through taxes and fees. Additionally, the rise in hotel rates has allowed both the city and state to recover some of their investment. Occupancy taxes, city taxes, state taxes, and destination charges have all contributed to the increased revenue for New York City, even with fewer available hotel rooms.

For example, the Andaz 5th Avenue, a Hyatt hotel, which previously offered rooms at around $550-600 per night, now charges $900 on an Advanced Purchase rate. This significant rate increase translates to higher taxes and destination charges, totaling around $54.62 per night. These additional charges directly impact visitors' wallets.

While the Sanctuary Hotel program may serve as a solution for the city's migrant crisis, it comes at a cost to both taxpayers and visitors. As New York City continues to grapple with the issue, it remains to be seen if similar programs will be implemented in other cities facing similar challenges.