New York City's Hotel Construction Freeze Drives Accommodation Shortage

Written by:

Rudi Davis

Date:

21 Mar 2026

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New York City’s accommodation crunch is not the result of short-term rentals but years of restrictive development policies that have frozen both hotel and residential construction. According to Sasha Ramani, a board member and AI advisor at CasaVoya, this artificial scarcity is forcing travelers and residents into fewer, costlier options as tourism demand rises.

“Short-term rentals are being scapegoated for the city’s own failure to build hotels and places to stay,” Ramani says.

Ramani argues that the city’s self-imposed accommodation shortage stems from two fronts: a near-total halt to hotel development and high costs and regulatory barriers for new apartments. Despite this freeze, tourism continues to grow, with major events like the World Cup expected to draw even more visitors. The result is a widening gap between supply and demand that cannot be closed by restricting short-term rentals.

Ramani contends that policymakers have misunderstood the sequence of events. Rather than short-term rentals causing a housing shortage, Ramani says decades of restrictive zoning and development rules have limited accommodation options, making alternative models like short-term rentals necessary. “The real issue is not short-term rentals,” Ramani explains. “It’s the lack of available accommodation capacity for both hotels and rental apartments, which has been effectively frozen by regulation and limited development.”

This regulatory freeze affects the entire accommodation market. Hotels cannot add rooms to meet rising demand, and residential developers face high costs and lengthy approval processes. While supply remains static, city leaders focus on restricting short-term rentals rather than addressing the actual shortage.

Cities Misplace Blame on Rentals

New York’s Local Law 18, which effectively banned most short-term rental platforms, including Airbnb, is the country’s strictest such regulation. While the law shut down major platforms, Ramani notes, it did not eliminate demand for short-term stays.

Instead, the market adapted. CasaVoya operates as an introduction service, not a booking platform, allowing it to comply with local laws. The company does not process payments or bookings; it connects guests and hosts, who arrange their own transactions directly.

This model was designed in response to regulatory barriers. CasaVoya now facilitates thousands of introductions for guests from over 20 countries, filling a gap that hotels and regulated platforms cannot. “CasaVoya was founded as a response to some of the regulatory challenges in New York,” Ramani says.

The broader effect is clear: when regulation restricts supply without addressing demand, markets shift into less transparent, harder-to-regulate channels. Travelers still need places to stay, and property owners still want to offer space. The question is whether these transactions happen through visible, regulated platforms or move outside city oversight.

Regulation Redirects, Not Eliminates, Demand

Ramani warns that the accommodation shortage will worsen during major events. The upcoming World Cup will test how New York handles a surge in visitors with a fixed supply of hotel rooms. “CasaVoya exists because that gap is real, and it’s only going to widen during events like the World Cup, where hotels hit capacity, and visitors have nowhere to turn,” Ramani says.

This is not unique to New York. Ramani points to San Francisco, the Bay Area, and Hawaii as markets with similar dynamics: strict development limits, strong tourism demand, and policies that restrict short-term rentals rather than increase supply.

The economics are straightforward: when supply is fixed, and demand rises, prices increase, and alternatives emerge. Short-term rental bans can be enacted quickly and are politically popular, but they do not address the underlying shortage. Building new hotels or apartments takes years and significant investment, making it less attractive to policymakers seeking quick fixes.

Supply Constraints Drive Up Costs

CasaVoya illustrates how businesses adapt to regulatory constraints. By acting as an introduction service rather than a booking platform, CasaVoya remains compliant with New York’s laws while meeting demand for short-term accommodation. The platform verifies properties and identities, facilitates communication, and provides reviews and trust signals, but does not handle payments or bookings.

Without processing payments, the company charges lower fees than traditional platforms, making stays more affordable for guests and more profitable for hosts. The platform primarily serves hosts who have experience renting properties in New York City. Hosts market their listings independently on sites like Craigslist, Facebook Marketplace, and Reddit, then use CasaVoya for verification and credibility.

Whether this model will expand beyond New York depends on whether other cities adopt similar restrictive policies. Ramani notes that CasaVoya lists properties in multiple countries and U.S. states, suggesting the model could spread as more cities tighten short-term rental rules. The company has also partnered with services such as OpenBNB, a Chrome extension that helps users find direct booking options, and MyRealTrip, a Korean travel platform that connects international travelers with accommodations in New York.

How CasaVoya Adapts to Regulation

The question for city leaders is whether to address the root cause of the shortage, limited hotel and residential supply, or continue restricting alternative accommodation models. Ramani’s analysis is clear: restricting short-term rentals while keeping supply frozen will make accommodation more expensive and less accessible, particularly during major events when demand spikes.

Unless cities change course and allow new hotels and apartments to be built, travelers and residents will face rising costs and fewer options. The market will continue to find workarounds, but the underlying shortage will remain unresolved.

Cities Must Address Supply Shortages

New York City’s accommodation crisis reflects a broader pattern: cities that restrict short-term rentals without expanding hotel and residential supply are not solving a shortage — they are deepening it. As tourism grows and major events draw larger crowds, the gap between supply and demand will continue to widen.

The market will adapt, as CasaVoya’s model demonstrates, but adaptation is not a substitute for policy reform. Until city leaders address the root cause — frozen development — travelers and residents will bear the cost of a shortage that regulation alone cannot fix.