Crain’s New York Business: Hard-hit hotels, restaurants and theaters expect slow recovery, even with federal funds
Pandemic restrictions devastated the hospitality sector, and the way back is still not in sight
By Brian Pascus
January 14, 2021
Social distancing, empty streets, darkened stages and shuttered lobbies highlight the devastation brought upon New York’s hospitality industry. Those within the sector argue a combination of federal aid and overhauled regulations are what’s needed to spark a post-Covid-19 turnaround.
Restaurateurs such as Jeffrey Bank, CEO of Alicart Restaurant Group, said he cannot understand why the Republican U.S. Senate won’t pass a relief package for the industry, especially after the way restaurants adapted and served a locked-down nation.
“The Restaurant Act needs to be passed,” he said, referring to the $120 billion bill put forward by the Democratic House of Representatives. “What other industry was shut down for months but was then asked to stay open to support everyone and hasn’t been given any support?”
The $900 billion Covid-19 rescue package passed by Congress on Dec. 27 did not include an amendment for the $125 billion Restaurants Act. Industry advocates hope the incoming Biden administration will make it a priority this year.
But Bank, with decades of experience in the industry, said the extended period of financial strain would close more restaurants in 2021. The only ones surviving will do so through the good graces of their landlord, he said.
“Our industry’s in dire despair,” Bank said.
‘It may take awhile’
Unlike restaurants, which have been able to continue business at limited capacity, Broadway has been dark for months, with the Stage Directors and Choreographers Society estimating unemployment at 98%. The Broadway League recently suspended all ticket sales through May.
“We’re not expecting anything until the second half of the year,” said Randy Anderson, a senior staff member at the state directors’ union.
It’s not clear how the $1.8 billion performing arts industry will recover without some form of federal assistance. A new carve-out in the recent Covid-19 rescue package allocates up to $15 billion for theaters, music halls and other cultural venues to tap into through federal grants and reimbursements.
Rehearsals are still a long way down the line, experts note, to say nothing of packed houses. A staggered reopening in the next two years is most likely.
“All 41 Broadway theaters will be filled eventually,” Anderson said. “They’ll come back, but it may take awhile.”
Then there are the problems facing hotels. A recent survey by the Hotel Association of New York City found that only half of the 102 hotel operators questioned say their industry will recover. More than 200 hotels have closed either temporarily or permanently during the pandemic; others have been turned into homeless shelters.
Vijay Dandapani, CEO of the Hotel Association of New York City, doesn’t expect business travel to resume until the summer or for conventions to begin until 2022. Meanwhile, he expects revenues will continue to crater under low occupancy.
Making matters worse is an archaic city property-tax law whose rates on hotels are assessed based on previous year values. Dandapani argues the tax must be amended this year.
“The single biggest assist from the city can and must be real estate tax relief in the form of an assessment that reflects the nearly 90% drop in revenue over the last nine months,” he said.