Cities are tightening rules on tourist lets to protect housing and manage neighbourhoods. The consequences for hotels depend on which accommodation is restricted—and where visitors stay instead.
When New York began enforcing its short-term rental registration system in September 2023, it changed the supply of visitor accommodation in one of the world’s largest hotel markets. A 2025 study estimates that the policy increased hotel average daily rates by $14–$19 a night and hotel revenue by $2.1bn–$2.9bn over the first 18 months studied.
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Its estimate of additional room nights was small and statistically imprecise. The apparent revenue gain came mainly through higher prices, rather than a large increase in rooms sold.
That result does not mean restrictions elsewhere will have the same effect. An entire apartment available throughout the year may compete closely with a hotel. A home let occasionally by its resident may serve different travellers. Visitors who lose one option may book a hotel, choose other accommodation, stay outside the city or change their trip.
Paris, Barcelona, New York and London illustrate four approaches to regulating short-term accommodation. Their rules are largely concerned with housing, planning and neighbourhoods. Each can also change the competitive market in which hotels operate.
| City | Principal approach | Question for hotels |
| Paris | Limits tourist letting of primary residences and controls the conversion of other homes | How much year-round apartment capacity can operate? |
| Barcelona | Uses tourist-accommodation planning controls and plans not to renew existing tourist-flat licences in 2028 | Where might visitors stay if licensed flats leave the market? |
| New York | Requires registration and platform verification alongside longstanding limits on unhosted short stays | How have tighter controls affected hotel rates and demand? |
| London | Allows eligible residential short lets for up to 90 nights a year without planning permission | How effectively is the threshold enforced? |
Paris: Drawing a line between a home and visitor accommodation
Paris distinguishes between a resident occasionally letting a primary residence and a property used more permanently for tourism.
A primary residence can be let as furnished tourist accommodation for up to 90 days a year. Letting another home generally requires authorisation to change its use, with compensation for the loss of residential space.
Furnished tourist accommodation must also be registered under the applicable rules. Paris links these controls to housing supply and the effects of tourist lets on neighbourhoods.
For hotels, the potential effect depends on the properties constrained. A professionally managed apartment available most of the year can serve some of the same guests as a hotel. A primary residence let for a few weeks contributes a different kind of capacity.
A listing count alone is therefore a poor measure of hotel competition. An investor assessing a Paris hotel needs to know where competing apartments are, what they offer and how many nights they are actually available.
Barcelona: Planning for a different accommodation mix
Barcelona treats tourist accommodation as an urban-planning issue. Its Special Urban Development Plan for Tourist Accommodation, known as PEUAT, regulates hotels, tourist apartments, tourist-use homes and other visitor accommodation by type and location.
New or expanded accommodation must be assessed against the conditions applying to its site.
The city also plans not to renew 10,101 existing tourist-flat licences in 2028. This is a stated future policy: those licences have not already left the market.
The size of the sector explains why hotels are watching. In 2023, Barcelona recorded 152,320 registered tourist-accommodation beds, including 76,662 hotel beds and 58,124 beds in homes licensed for tourist use. These figures describe the market at that time; they do not forecast how many beds will disappear in 2028.
If tourist-flat capacity falls while visitor demand remains strong, hotels could capture some guests or gain pricing power.
Much depends on whom the flats currently serve. Families seeking several bedrooms and a kitchen may be less willing to switch to hotel rooms. Other visitors may choose serviced apartments or stay outside Barcelona.
Nor would fewer tourist flats automatically mean permission for more hotels. PEUAT also regulates hotel development. Investors need to assess possible changes in competing accommodation and the planning limits on any proposed hotel.
New York: A clearer test of the hotel effect
New York’s Local Law 18 created a registration system for short-term rental hosts and requires booking platforms to verify registrations before processing transactions. Enforcement of the platform requirements began in September 2023.
The law did not create the city’s core restrictions on unhosted short stays. Those rules predated it: an entire home generally cannot be let to visitors for fewer than 30 days, while legal residential short stays require the host to remain in the unit with no more than two guests. Local Law 18 made those existing restrictions more enforceable.
For visitors seeking an entire home for a short stay, the legal market is consequently much narrower. That makes New York a useful case for examining whether less alternative accommodation benefits hotels.
The study cited above provides evidence of a hotel pricing effect. Its rate and revenue figures are research estimates for a particular city, policy and period. They should not be interpreted as money known to have moved directly from former short-term rental guests to hotels.
For investors, the distinction between occupancy and pricing power is central. Restricting a competing product may allow hotels to charge more without producing an equivalent increase in occupied rooms. Neither outcome can be assumed in a different market.
London: A threshold whose effect depends on enforcement
In London, eligible residential properties can generally be used for short-term letting for up to 90 nights in a calendar year without planning permission, subject to conditions. Letting beyond that threshold normally requires permission. The rule allows limited short-term use of homes while restricting their conversion into permanent visitor accommodation.
For hotels, the question is whether the limit changes the accommodation visitors can actually book. Enforcement matters. In March 2026, the Mayor of London said boroughs faced difficulties enforcing the 90-night rule.
The government has been developing a registration scheme for short-term lets in England, but that work should not be mistaken for an existing London-wide licensing regime.
London shows why the legal threshold is only part of market analysis. The practical effect also depends on identifying properties, obtaining information from platforms and pursuing breaches.
Which short-term rentals compete with hotels?
Research indicates that competition exists, but its strength varies. A meta-analysis drawing on 33 studies found a small overall negative effect of Airbnb supply on hotel performance, with differences by market and hotel type.
A study of Barcelona, London and Paris found that Airbnb supply reduced hotel revenue per available room, but that the effect varied by city, hotel segment and listing type. Listings less comparable with hotel rooms generally had a weaker economic effect.
A hotel’s competitive set might include serviced apartments, aparthotels and professionally managed short lets alongside other hotels. It will rarely include every residential listing in the city.
The useful measure is comparable accommodation available in the locations and periods when the hotel expects to sell rooms.
Even where a regulation removes that accommodation, displaced visitors do not all make the same choice. A couple seeking a central studio might book a hotel. A family seeking a three-bedroom home might stay outside the city, choose another property type or travel for fewer nights.
Housing outcomes and hotel outcomes also need separate analysis. The OECD’s 2026 tourism review says evidence on the housing effects of short-term rentals is mixed. Restricting a tourist let does not guarantee that the property will become a long-term rental home.
Equally, removing a visitor bed does not guarantee that its former guests will book a hotel.
What hotel investors should test
Before treating a short-term rental restriction as an advantage for a hotel, operators and investors should ask:
- Comparable supply: How many affected properties serve the hotel’s likely guests?
- Availability: How many nights are those properties offered, and when?
- Location: Do they compete for the same neighbourhood demand?
- Enforcement: Will the rule materially change what visitors can book?
- Visitor response: Will affected guests choose hotels, other accommodation or another destination?
- Hotel supply: Can existing hotels absorb demand, and can new rooms be developed?
Cities are taking a more active role in deciding how residential space can be used for tourism. Their policies can change hotel competition, but they do not produce a predictable winner in every market.
For a hotel investment, the question is which accommodation capacity will actually change, how closely it competes with the proposed hotel and where its guests are likely to go next.
