New York bans trade in table reservations

New York bans trade in table reservations

New York Rooftop Restaurant
Tables with spectacular views or in trendy celebrity restaurants are sometimes traded at black market prices in New York. / © dewi, Adobe Stock

Behind the scenes of New York's luxury gastronomy world, the restaurant reservation trade is flourishing. A new law aims to put an end to this. 

Fancy pasta at the posh Italian restaurant Carbone in New York's Greenwich nightlife district or a whiskey at Ralph Lauren's famous Polo Bar? No problem for a few hundred dollars. But for the reservation, not for the food and drink. 


In the US metropolis of New York, there are no limits to what money can buy. As it is often impossible to get a table in the city's most popular restaurants weeks in advance, an online marketplace for table reservations has developed. On online portals, those with deep pockets can bid for reservations that others have previously purchased.


A law that recently came into force in the US state of New York is now set to put an end to "restaurant reservation piracy", as the business model is also known. Third-party platforms are no longer allowed to sell reservations without the restaurants' consent.


Fight against bots 

This is because providers of the highly coveted reservations are often said to be automated bots that snatch up free seats to profit from the high demand. While life in New York is becoming increasingly unaffordable for some, others are spending up to 3,000 euros on New Year's Eve to get a table at "The Corner Store" in Soho, for example.


New York Governor Kathy Hochul describes the "predatory black market" as unfair exploitation and emphasises that the new law will give more customers access to the city's trendiest restaurants again.


System is not new

Eyewash, says Jonas Frey, founder and CEO of Appointment Trader, one of the platforms on which reservations can be purchased. The Miami-based German, who arranges around 80,000 reservations a year with his team, argues that instead of a general ban, the use of bots could have been specifically prohibited: "We wouldn't mind that at all, they are largely banned on our platform anyway."


The sellers are mainly people who are unable to honour a pre-paid reservation or restaurant employees who want to earn some extra money. The many critics don't believe that.


Moreover, the system is not new. The law does not make it any easier for ordinary people to get a seat in most exclusive restaurants, but only through contacts, individually negotiated deals with restaurants, through which customers get exclusive seats, or authorised sellers, who often demand even higher prices, says Frey.


Exclusivity as a million-dollar business

Other companies have long since recognised that a lot of money can be made from restaurant and event management. Platforms such as Resy, OpenTable, Dorsia and Tock, which co-operate with restaurants for a fee, are not affected by the new law, even if some services are chargeable for customers. American Express, which has already acquired Resy, also took over Tock last year for 400 million dollars, a platform that is aimed in particular at affluent customers with bookings for upmarket restaurants and luxury events.


More and more restaurants in New York are also opening exclusive clubs with admission fees and annual subscriptions of tens of thousands of dollars, private dining rooms and exclusive top chefs. Deposits of several hundred dollars for reservations made directly with the restaurant are not uncommon - and can also be retained in the event of cancellations.


Empty tables as a result?

Pablo Rivero, CEO of Resy, welcomes the new law, also on behalf of the restaurant partners: "It is a big step forward in the industry's efforts to protect restaurants and guests from reservation fraud."


State Senator Nathalia Fernandez, who proposed the law, and the president of the New York Restaurant Association, Melissa Fleischut, criticised the fact that the sale of reservations on third-party platforms has led to an increase in no-shows and last-minute cancellations - resulting in empty tables, lost sales and a lack of tips for staff.


Frey rejects this criticism. Unlike a black market, his platform offers a money-back guarantee for customers if a reservation does not work out, and strict controls are in place to ensure that sellers actually broker the majority of their reservations so that restaurants are not left with empty tables. In addition, the restaurants traded are so expensive that reservation fees of 100 dollars on average are not a major factor for the guests.


"More people want to visit exclusive restaurants in New York than there are tables - and that's why there is a price," argues Frey. "But we didn't invent or create the problem. Of course, those who pay have an advantage over those who pay nothing. Will demand disappear because of the ban? No, it will increase and probably shift to illegal channels."


Frey wants to continue despite the law. He says that Appointment Trader does not have its back against the wall due to strong sales in the millions but wants to fight back. And new markets are already in sight thanks to rising demand - including Europe. / dpa

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