New York City quietly signed a $929 million contract extension with the hotel industry in early 2025 to house homeless individuals and asylum seekers in emergency shelters, marking the latest chapter in the city's expensive reliance on commercial hotels to address a housing crisis that has ballooned costs and displaced traditional tourism.
The contract, which runs through June 2026, reflects the city's continued dependence on hotels as roughly 86,000 homeless individuals and asylum seekers now require shelter citywide. At $352 per night per person, the arrangement has become a financial lifeline for the hotel industry while straining municipal budgets.
The city currently utilizes approximately 150 hotels to shelter migrants, with about 9,500 rooms contracted through the Hotel Association of New York City across 119 properties12. The hotels span all five boroughs, with the largest concentration in Queens, followed by Brooklyn and Manhattan1.
Since spring 2022, nearly 190,000 migrants have passed through the city's shelter system, contributing to total migrant-related spending of $3.12 billion over three years34. The Roosevelt Hotel, which served as a centralized intake center for migrants since May 2023, closed in June as the city scales back its response amid declining new arrivals5.
New York's use of hotels for homeless shelter dates to the 1980s, when a court-mandated "right to shelter" law required the city to house anyone in need1. The practice expanded during the COVID-19 pandemic as officials feared traditional congregate shelters would spread the virus2.
The migrant surge that began in 2022 intensified hotel usage, with the city housing migrants in "tens of thousands of rooms" at peak capacity3. In March 2025, the city ended its Hotel Vouchering Program, which had provided 28-day hotel stays for 7,875 migrant families with children since July 20234.
Critics argue the hotel contracts take units off the tourist market and lack competitive bidding, potentially inflating costs1. The average daily hotel rate in New York reached $417 last year, an all-time high1.
City Comptroller analysis found hotels cost $332 per day for shelter and services combined, compared to approximately $52 for traditional shelters with longer leases2. However, hotels contracted by other city agencies beyond the Department of Homeless Services cost an estimated $404 daily2.
"The taxpayers cannot sustain this indefinitely," said Nicole Gelinas of the Manhattan Institute, urging state intervention in the crisis3.
