I agree with your larger analysis, and wish that Airbnb would essentially pack up and go home. But I don't think you're correct in assuming that rental rates and short term vacation rental rates are in the same economic bucket. That someone can make more off a property does not mean that the property is necessarily worth more, it may also mean it's zoned in a way that is economically locally suboptimal for that property. In this case that's relevant because hotels need to charge more for the same space because they pay very different taxes than homeowners. So an apartment wouldn't necessarily fetch that $800 more a month on the renters market, though it does in a different marketplace under a different premise (Airbnb and short term renting, respectively).
The different economic buckets exist largely because of regulations. The apartment might not fetch a full $800 per month in short term lets if property owners across Manhattan could charge the highest rent they wanted for the most profitable letting period, but it certainly wouldn't be possible for tenants to make a living off the difference between an artificially high price for [illegal] subletting and the artificially low price of renting long term for established tenants.
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I agree with your larger analysis, and wish that Airbnb would essentially pack up and go home. But I don't think you're correct in assuming that rental rates and short term vacation rental rates are in the same economic bucket. That someone can make more off a property does not mean that the property is necessarily worth more, it may also mean it's zoned in a way that is economically locally suboptimal for that property. In this case that's relevant because hotels need to charge more for the same space because they pay very different taxes than homeowners. So an apartment wouldn't necessarily fetch that $800 more a month on the renters market, though it does in a different marketplace under a different premise (Airbnb and short term renting, respectively).
The different economic buckets exist largely because of regulations. The apartment might not fetch a full $800 per month in short term lets if property owners across Manhattan could charge the highest rent they wanted for the most profitable letting period, but it certainly wouldn't be possible for tenants to make a living off the difference between an artificially high price for [illegal] subletting and the artificially low price of renting long term for established tenants.