New York's City Council is considering a bill to relax restrictions on European-style youth hostels and, according to its backers, generate tax revenue and $280 million in annual economic activity to the city.
Councilman Mark Weprin from Queens introduced the bill before the city council on Monday while visiting hostel executives from Europe met with Mayor Bill de Blasio.
"The meeting with the mayor was positive," Feargal Mooney, chief executive of online booking platform Hostelworld International, said in an interview in The Bond Buyer's newsroom. "He had an open mind and was quite pleased. He realized that a lot of work went into the legislation and that it was well-thought out."
Paul Halpenny, group director of supply for Hostelworld, said the $280 million would include ancillary spending such as restaurants, bars and other entertainment.
City legislation passed in 2010 clamped down in single-room occupancy units after widespread complaints of illegal rentals through websites such as Airbnb. The new law, though, made collateral damage of the hostel industry.
"This is big business in the rest of the world - Paris, Amsterdam, Barcelona — and New York is missing out," said Mooney. London, he added, sold 1.6 million hostel beds compared with New York's 300,000.
A key force behind the bill, Jerry Kremer, the founder and chairman of Uniondale, N.Y., lobbying group Empire Government Strategies and former chairman of the state Assembly's Ways and Means Committee, said the city has lost about $150 million in tax revenue since 2011.
"That includes occupancy tax and sales tax. Remember, people buy stuff," said Kremer, a partner with Ruskin Moscou Faltischek PC. Kremer said hostel revival could have a multiplier effect on economic development. "Hostels provide a safe environment and people will be spending money in the city, so it's win-win. You could have a coffee shop, a restaurant or bar adjacent to it. A visitor to the city does not want to stay in a lonely room and not meet anybody."
According to Kremer, old manufacturing buildings in Long Island City in Queens, the Williamsburg section of Brooklyn and the South Bronx are ripe for such activity.
"Remember, this legislation is targeting commercial areas only," said Kremer. "We're not in the NIMBY [not-in-my-backyard] crowd. This bill is carefully structured."
Weprin's bill would require city licensing of the dormitory-style units.
Kremer said that with mayoral transition out of the way — de Blasio in his second year succeeding Michael Bloomberg - backers can launch an informational campaign.
The council has scheduled a hearing on the bill for early June.
"Private equity investors are willing to step in, but right now they see gray area in the legislation," said Halpenny. "The bill would change that. We're optimistic."
