Proposed New York Hostel Legislation (Survey)

There is absolutely NO chance HW would use these criteria on all properties it lists, no chance whatsoever - it would eliminate WAAAAAY too many existing hostels and make it incredibly difficult for more hostels to join. They’re trying to expand not retract.

I’m not entirely convinced of this. It’s easier to change their own requirements than it is to get laws passed. While they might not apply everything in this document to all hostels that they work with, it wouldn’t surprise me if they make some changes to their own conditions.

For example, they have already determined that a 3-bed dorm is not acceptable. They feel there need to be a minimum of four beds in a dormitory. I know of one case where they switched the classification and started selling a hostel’s 3-bed dorms as Private rooms without even telling the hostel. When the situation was brought up, HW explained that the change was due to a new policy on dorm size.

Despite the fact that the large-scale application of these requirements would outlaw the vast majority of the hostel industry, it may still, in fact, be in HW’s interest to push for this in some areas. If they successfully wiped out small hostels, then only the big corporate guys would be around. One 800-bed hostel could potentially support the equivalent demand of 16 different 50-bed hostels. While the lack of choice would be horrible for the travelers themselves, it would be great for HW for several reasons:

• Without competition there are no price wars, so rates and subsequent commissions can rise. (More money!)
• Small hostels frequently avoid the extensive use of yield management tactics, which limits the extent to which the larger hostels can use it too. Reduced bed supply means that more aggressive yield management tactics can be applied by the surviving hostels to boost profits and the subsequent commissions. (More money!)
• They only have to deal with a handful of contacts for all bookings, instead of spending time on countless little hostels who ask lots of questions and want their businesses to succeed amidst competition. Now they can reduce staff costs because they won’t need as many account managers to handle the hostels. (More money!)
• With less hostels in the market there is less chance of business owners writing fake reviews to influence their competitive position. In fact, the reviews will matter very little because of the limited number of choices.
• They can work with corporate partners who share their corporate values instead of owner-operators who frequently choose to run hostels because of the lifestyle it affords them rather than the profit it brings.
• They can focus more time and effort on signing up new hotel properties to compete with Expedia and Booking.com, which Feargal Mooney said is the goal for WRI when they bought HB. (More money!)

A great many countries already have legislated standards for hostels and most are actually trying to encourage tourism.
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The only risk would be in cities that currently don't have specific requirements basing any future legislation on NYC's example.

HW is working closely with STAYWYSE, who told me specifically that they want to propose hostel legislation to the UN World Tourism Organization. Even countries with established legal hostel requirements could be affected if that were to happen.

If HW started pushing for reforms on hostel laws, it would be easy to dupe a government that is unfamiliar with hostels into believing that HW is some sort of authority over the industry. After all, they run the biggest hostel booking site, they wrote the laws that were accepted in NYC, and they have lots of money. They must be in charge, right? I think there could be larger ramifications of this legislation proposal than just the NYC hostel scene.

Why doesn´t anyone accuse the hostels in NYC of being sound asleep while the city council shuts them down? They could have easily lobbied for some fair regulations themselves. They didn´t.

If I’m not mistaken, the hostels did get together and tried to speak out against the new law. So did the B&Bs. They found that lobbying for fair regulations was not as easy as you suggest.

I find the proposed regulations quite acceptable, with the exception of the 400 cubic feet room space per bed - that number is certainly too high. I don´t see how these regulations favor large, corporate hostels over small ones.

Well, any hostel with less than 30 beds is automatically illegal.

Also, in addition to a hostel, the operator has to simultaneously invest in opening at least one additional business (bar, restaurant, coffee shop, or cafeteria) on-site. This is completely unnecessary and prohibitive for small businesses. It was written specifically to describe the model used by the large corporate hostels that HW is trying to attract to NYC and to exclude smaller hostels. What other explanation could you give for this requirement?

As another example, According to §26-102 a hostel can operate in a newly constructed building. An existing building can also be converted for hostel use, so long as it is not a Multiple Dwelling* (§26-102.1). This means a hostel has to be a stand-alone building and/or a new construction. §26-102.3 then says construction permits won’t be issued until the newly-created Office for Licensed Hostels approves the “fitness of the operator, including financing” with no explanation as to what might qualify an applicant as being “fit.”

While large corporations with deep pockets may have no trouble funding custom-built facilities that meet all of these requirements, the conditions are unrealistic for small businesses.

You are looking from the perspective of a corporate hostel chain. The proposed legislation supports your business model. Put yourself in the shoes of a small business owner and ask yourself how you could make things work under these conditions. They are intentionally prohibitive so that only the large corporate hostels with deep pockets can meet them and small hostels cannot. It makes small hostels illegal, if not impossible, to operate. But why should the smaller hostel model be excluded by law?

Out of curiosity, if all the conditions of this legislation were applied to you as they are written now, would all of the Wombats hostels still be legal?

*Definition of a Multiple Dwelling from http://tenant.net/Other_Laws/MDL/mdl.html

A "multiple dwelling" is a dwelling which is either rented, leased, let or hired out, to be occupied, or is occupied as the residence or home of three or more families living independently of each other. On and after July first, nineteen hundred fifty-five, a "multiple dwelling" shall also include residential quarters for members or personnel of any hospital staff which are not located in any building used primarily for hospital use provided, however, that any building which was erected, altered or converted prior to July first, nineteen hundred fifty-five, to be occupied by such members or personnel or is so occupied on such date shall not be subject to the requirements of this chapter only so long as it continues to be so occupied provided there are local laws applicable to such building and such building is in compliance with such local laws. A "multiple dwelling" shall not be deemed to include a hospital, convent, monastery, asylum or public institution, or a fireproof building used wholly for commercial purposes except for not more than one janitor's apartment and not more than one penthouse occupied by not more than two families.

If I’m not mistaken, the hostels did get together and tried to speak out against the new law. So did the B&Bs. They found that lobbying for fair regulations was not as easy as you suggest.

I meant: they could have proposed legislation before HW came around. They haven´t done that. Why?

Well, any hostel with less than 30 beds is automatically illegal.

And automatically unprofitable in any western country. Look at cities with high real estate prices and high labor costs: there are no small hostels. With 30 beds, you don´t generate nearly enough revenue to pay your staff more than $200 a month.

Also, in addition to a hostel, the operator has to simultaneously invest in opening at least one additional business (bar, restaurant, coffee shop, or cafeteria) on-site.

Buy a fridge and a few tables and - voilá - you have a bar.

As another example, According to §26-102 a hostel can operate in a newly constructed building. An existing building can also be converted for hostel use, so long as it is not a Multiple Dwelling* (§26-102.1). This means a hostel has to be a stand-alone building and/or a new construction.

As far as I understand this, it´s perfectly OK to use a floor of an office building. What NY doesn´t want is single apartments or entire apartment buildings to be turned into hostels. That is a completely legitimate thing, if you want to avoid further gentrification and rising housing costs. Apart from that, would you want to live next door to a hostel in the same building? I wouldn´t. I think this is completely fair.

It was written specifically to describe the model used by the large corporate hostels that HW is trying to attract to NYC and to exclude smaller hostels. What other explanation could you give for this requirement?

I´m sure this legislation is "intentionally prohibitive" because NY has had some extremely bad experience with hostels. There were some very bad hostels which violated the fire code, didn´t give a shit about their customers (ask Josh for some stories) and terrorized their neighbors with noise 24/7.

Out of curiosity, if all the conditions of this legislation were applied to you as they are written now, would all of the Wombats hostels still be legal?

No, because we don´t have 400 cubic feet room space per bed. I have already said this is the only stupid rule I found in the text.
Also, two of our hostels were "multiple dwelling" buildings before we aquired them. In contrast to NY, Vienna does not have a severe shortage of affordable apartments, so no such rule is necessary.
Other than that, all of the Wombats hostels would still be legal.

so on one hand, we want minimum standards for hostels to be listed to stop hotels and other properties being listed as hostels and then when such standards are introduced... its a bad thing?

I think you have combined my comments with those of another poster. My issue is not with hotels calling themselves hostels or a need for standards to prevent such cases. (Although I do have issues with HW calling all accommodation types “hostels.” That’s a question of misleading advertising rather than standards though, and a different discussion entirely.)

Setting appropriate minimum standards is one thing. Setting unreasonable or unnecessary minimum standards that are designed to exclude certain business models is another thing entirely.

i think you might be over-estimating the marginal cost of additional hostels to HW itself… I really see no incentive for HW to deliberately restrict the sort of hostels that they list.

I would think so too, but it doesn’t seem to be that way in practice.

One of my former HW Buddies told me that she was responsible for over 12,000 properties, and that she would regularly refuse to list new small hostels because it wasn’t worth the trouble for her.

Now HW’s new contract even has a clause that says they can cut a hostel immediately from their site if they feel that associating with them would harm HW’s reputation. They’re even censoring owner’s comments to reviews because they can’t be associated with a certain image of hostels. It seems to me that they do want to restrict the sort of hostels that they list.

sure, one 800 bed hostel can bring them as much revenue as 16 fifty bed hostels - but an 800 bed property and 16 fifty bed properties bring in TWICE as much. so whats HW more likely to want?

The money only doubles if there are enough travelers to fill all of the beds. But if there are only 800 travelers, then the competition gets harder and the chances of a price war increase. In this case, HW is likely to prefer one big partner for all of the reasons above. Obviously NYC has a lot more than 800 travelers, but if HW could effectively replace every set of 16 small hostels with one big one, then it seems to me they would do it. The way this proposal is written tells me that they are trying to do exactly that.

Well, any hostel with less than 30 beds is automatically illegal.

And automatically unprofitable in any western country. Look at cities with high real estate prices and high labor costs: there are no small hostels. With 30 beds, you don´t generate nearly enough revenue to pay your staff more than $200 a month.

Unprofitable, perhaps. But that should be up to the prospective business owner to decide. There are people who run hostels for the lifestyle rather than the profit. Or because they own some property and found running a hostel to be a convenient way to maintain it without funding the upkeep themselves. Or as a family business or as great way to spend retirement. I have stayed in places like this, even in western countries with high labor costs. If it were truly not possible to run a business with so few beds, then those hostels would be weeded out naturally. A law that precludes them from the start is unnecessary.

Also, in addition to a hostel, the operator has to simultaneously invest in opening at least one additional business (bar, restaurant, coffee shop, or cafeteria) on-site.

Buy a fridge and a few tables and - voilá - you have a bar.

If only that were true. If there are such stringent restrictions on accommodation, then surely licenses would also be required to prepare and sell food and beverages, especially alcohol. Each of these brings their own set of challenges as it is, in fact, another business. In any case, this is a completely unnecessary requirement for a hostel. I can’t think of any reason why this should be required by law. This entire section should be removed from the legislation.

I´m sure this legislation is "intentionally prohibitive" because NY has had some extremely bad experience with hostels. There were some very bad hostels which violated the fire code, didn´t give a shit about their customers (ask Josh for some stories) and terrorized their neighbors with noise 24/7.

NY didn’t write this legislation draft. HW did. It’s not about NY’s bad experiences with hostels.

I fully agree that hostels need to meet current fire safety codes. The fact that some hostels provided bad customer service and disturbed their neighbors with noise is not a reasonable basis for laws that prohibit a variety of business models. In fact, if the laws were written so as to avoid disturbing neighbors, I doubt that hostels would be required to have bars. There's more to it than that, and it has entirely to do with HW's biases.