By Vijay Dandapani, president and CEO of the Hotel Association of New York City
March 1, 2021
The pandemic has been an equal opportunity scourge, ravaging the financial health of cities around the U.S., but none has suffered more than New York.
The Big Apple’s precarious financial condition shows up in a recent report from the think tank Truth in Accounting, which places New York at the bottom of a list of 62 cities in trouble. That makes it hard to buy into overly optimistic predictions about a rapid economic comeback for the city.
Before 2020 New York City was the envy of cities around the world for its seemingly endless ability to attract visitors because of its plentiful and richly diverse culture. With nearly 67 million annual tourist arrivals a little more than a year ago, New York City was a magnetic destination like no other. That gusher of tourism spawned more than $7 billion in taxes for the city in 2019; that figure was projected to reach nearly $10 billion in five years.
But beginning in March the city saw those dollars evaporate overnight, tipping New York and its tens of thousands of businesses, including more than 700 hotels, into an abyss.
The currently comatose hotel industry cannot do much to alleviate the city’s macro-economic problems in the near or medium term. But it is uniquely positioned to restore much of the economic and cultural luster that the Big Apple is famous for in the long term.
That would require some pressing short-term policy decisions, however, to preempt a death spiral that is underway for some of the city’s hostelries while embracing a more enlightened and far-reaching approach to the industry for the longer term.
The city’s hotels saw a dizzying revenue loss of nearly $9 billion in 2020. The resultant loss of real estate, occupancy and sales taxes lopped off more than $1.5 billion from the city’s coffers. Restoring that essential flow of taxes that do not come from city residents is going to require avant-garde thinking from policymakers.
A good place to begin is to acknowledge that the best disaster-recovery policies are those that take the long view, with measures that are spread over a five- to 15-year horizon. It wouldn’t be helpful to formulate policy based on current conditions. The long view would require recognizing certain enduring truths about humans, such as their fundamental resiliency with a capacity to make short-term adjustments (Zoom, dining in the cold and the like) while in the long run reverting to essential sociological behavioral norms.
These include in-person meetings for business and pleasure once the acute risk has passed.
The long view would include a pathway to ensure New York returns to its worldwide perception as a place with myriad attractions that are safe and clean. If there is one wish that policymakers can grant to the besieged hotel industry, it would be to provide a safe and clean environment. The 1990s and the 2000s saw tremendous tourism growth because the perception of New York as a safe place was indelibly implanted in the minds of prospective visitors around the world.
Safety and cleanliness cannot be overstated and are nonnegotiable for a restoration of the city’s thriving tourism economy.
At a more granular level, it will require a critical, fresh look at the regulations and tax incentives that preceded the pandemic and those that were instituted as a reaction to it. Government policy should recognize the extensive workplace adjustment already afoot in terms of more digitization, which need not necessarily translate into jobs lost, a reflexive and understandable reaction. A good example is the widespread use of Quick Response codes by restaurants when they were allowed to reopen. Not only did the codes serve to maximize safety, but they also provided data that restaurants and hotels could use for marketing options.
The hotel industry historically has been nimble because of its inherently short and ephemeral business horizon. The pandemic has spurred hotel professionals to seek solutions via technology and changed service protocols to minimize costs while they await the gradual resumption of business.