In September New York City introduced stringent restrictions on short-term rentals leading to news very quickly that Airbnb bookings in the city had “dried up”.  And this is by no means new, cities like Barcelona and Berlin already have strict restrictions on short-term rental properties, requiring hosts to obtain a licence to operate.

Nearly three months on the industry has had time to analyse the impact and reflect on what this means for the wider travel and tourism space, including those selling accommodation. We spoke with a range of experts from leading travel technology companies to find out more.

Although hotels will no doubt welcome the move, it shouldn’t be taken lightly.  Alex Barros, Chief Marketing & Innovation Officer at hotel revenue management expert BEONx, says: “Short-term rentals have been a significant threat to hotels for quite some time in New York, London and Paris, AirBnb has take 10-13% of the room nights in such destinations. In my opinion short term rentals have opened new markets with segments that would not necessarily go to the destination previously, and the brand advocacy Airbnb has achieved is the hardest thing to beat for hotels.  So the industry is likely to welcome this news.  However, hotels shouldn’t just sit back and expect an influx of bookings.  They do need to consider what short-term rentals have been able to offer travellers that they have not and how AirBnb has acquired this segment of travellers that do not like to stay at hotels and prefer alternative accommodation.  Travellers appreciate the independence and privacy of staying in a short-term rental, along with the local insights and suggestions for things to do that hosts often give, an experience hotels will struggle to provide, so if hotels can now fill this new gap in the market, they will likely win business from consumers.  Travellers will now likely find a shortage of facilities like self-catering, outdoor space and family-friendly spaces in destinations like New York City; filling these voids could lead to greater profitability for hotels, but today as we speak despite the stringent regulations you can still find over STR 1300 properties available in NYC.”

But B2B travel service provider DidaTravel thinks that for the Asian traveller segment the threat of short-term rentals is not quite so significant for hotel operators: “In Asia, travellers prefer to book travel via trusted sources; they like a high degree of certainty over what they’re going to get and the quality of service they’re going to receive,” says CMO Gareth Matthews.  “This is particularly driven by China, which is once again fast-growing in terms of outbound travel numbers.  These travellers’ needs are not guaranteed to be met through booking short-term rentals – particularly those that are not sold via the same traditional channels as hotels, with various images, facilities and booking options.  Hotels that are concerned by the threat of short-term rentals have a huge market here in APAC to tap into – if they don’t already, they should consider diversifying by selling to Asian travellers.”

Looking at this from the perspective of intermediaries selling travel, Frédéric Pilloud, Director of Marketing at Digitrips, the owner of leading French multi-product travel platform MisterFly, comments: “With the removal of much of the short-term rental properties in NYC from the market one of the big winners have been the tour operators selling packages, as they are now able to be more competitive with their hotels + flight combination offers. There are no doubt other factors coming into play – such as an increased and cheaply priced air capacity between France and NYC and the conflict in the Middle East making people wary of many countries now – but we’ve seen a 48% increase year-on-year in the number of packages being sold for NYC by French-based tour operators. That’s an unprecedented leap that we couldn’t imagine if STR properties were still easily available for direct booking by FIT travellers.”

Considering the luxury traveller though, such restrictions will arguably reduce choice for travellers – and cities need to be careful not to drive them away.  “Restricting the short-term rental market is going to lead to a loss of choice for consumers,” adds Eugene Ko, Marketing Director at Phocuswright.  “Consumer travel is being increasingly driven by experiences, so short-term lets can often meet that growing desire for the unique and individual.  These types of restrictions are likely to be unpopular among many travellers who have come to love the short-stay model.  This could drive some travellers away from cities where restrictions are present – unless the industry can fill that gap and meet these needs in other ways.”

Also commenting on the link between experiences and short-term rentals, Ismael García, CMO from Civitatis, the world’s biggest Spanish-speaking tours & activities online seller, tells us that “we see a big link between groups travelling and them using short-term rental accommodations. Clearly not everyone in an Airbnb style property is a group, but those travelling in a group for leisure, say a group of friends celebrating a landmark birthday or pre-wedding bachelor party, often prefer to book an apartment. Next up on their list are organised activities, and the short-term rental owners are a big source of referrals to us – so think twice about all the consequences of limiting such properties, it impacts the whole local economy.”

Travel management companies and corporations have often struggled on how business travellers should, or should not often, use short-term rental properties when on business trips. But they shouldn’t be breathing a sigh of relief yet. According to Andres Fabris, Founder & CEO from Traxo, a company specialising in location awareness for business travel, “short-term rentals have been difficult to manage for TMCs and corporations, presenting a significant duty of care issue. New York City’s new restrictions will partially solve this problem for business travel within the city. However, it will always be an issue somewhere else. It is essential that TMCs and corporations equip themselves with the right technology to support their travel policies. Finding the right travel management technology that maintains business travel booking visibility, even when employees make their own purchases directly, is absolutely essential – and totally possible today in a way that it wasn’t three years ago.”

Finally, these types of short-term rental restrictions could spur M&A activity in the hospitality space: “Regulatory risk has been one of the biggest concerns for investors in the short-term rental space, and this has been causing uncertainty over the valuations of these companies,” adds Morgann Lesné from investment banking firm, Cambon Partners.  “This has previously made it difficult for short-term rental companies to raise money and grow their businesses – and as restrictions like the ones in New York City increase, this only serves to make it more difficult.  We may see this therefore create some M&A activity as short-term rental companies run out of options to grow within these restrictive conditions and can’t raise finance in the way they could before.”