Crain’s New York Business: City moves to limit new hotel development
By NATALIE SACHMECHI
Updated October 20, 2021 1:32 PM
A proposal to require all newly built hotels to secure a special permit is one step closer to becoming law in New York City.
Designed by Mayor Bill de Blasio to curtail the development of new hotels, the controversial bill has faced backlash from members of the real estate industry who say it would stifle the hospitality sector’s recovery. The measure is supported, however, by the Hotel Association of New York City, which says the limits on development would help existing hotels stay competitive.
There was “an unprecedented development boom that saw the hotel market almost double in size from 74,000 in 2007 to 138,000-plus rooms in 2020,” Vijay Dandapani, chief of the association, wrote in a New York Daily News op-ed in July. “Oversupply has been the direct cause of consistent declines in revenue-per-available room.”
Some members of the City Planning Commission criticized the proposal during a meeting Wednesday, but the agency then voted 9-2 to approve the measure. The bill now moves to a hearing and subsequent vote before the City Council.
Commissioner Alfred Cerullo of Staten Island, who had been against the proposal from the beginning—calling it “suspect”—said he reluctantly voted in favor.
“I can’t think of a proposal that has me more at odds with my own community,” Cerullo said at the meeting. “It’s clear that having some mechanism to require participation from … the surrounding community … is a priority.”
Commissioner Hope Knight, president of the Greater Jamaica Development Corp., expressed concerns that the bill excluded hotels built to be used as transient or homeless shelters. Those should be subject to a public-review process as well, she said.
The proposal is being challenged by a group of unnamed members of the hospitality industry who go by New Yorkers for Tourism. The group filed a lawsuit against the city to block the law.
The “arduous, time-consuming, expensive and uncertain” review process required to be able to build new hotels would hurt the hotel and tourism industries, the lawsuit says.
The group alleges that the city was backing the bill only to prop up the Hotel Trades Council, a powerful hotel workers union that supports de Blasio. The measure would give the union leverage to force hotels to enter into collective bargaining, the lawsuit claims.
Union President Rich Maroko lauded the approval, which he said would protect currently unionized hotels.
“The overwhelming approval of special permits by land-use experts shows that despite greedy real estate developers trying to intimidate and influence the vote with absurd legal threats, common-sense regulations to protect our tourism economy and the safety of our communities won out,” Maroko said. “We commend the City Planning Commission for standing strong in the face of the intimidation and misinformation campaign of big real estate developers.”
In addition to Cerullo and Knight, Commissioners Joseph Douek, Orlando Marin and Raj Rampershad voted to approve the measure. Richard Eaddy and Anna Hayes Levin voted no.