Hotel Investment Today: Hoteliers fight NYC licensing bill

By JEFFREY WEINSTEIN

August 5, 2024

AHLA leader calls Hotel Safety Act ‘damaging,’ while the head of the NYC hotel association said it’s a ‘death knell’ for many small hotels. American Hotel & Lodging Association Interim President and CEO Kevin Carey summed up the impact of New York City’s proposed Hotel Safety Act in one word, “damaging.”

On a local radio show on Sunday after the city council revised a previously stalled bill that the AHLA said does not address the legislation’s many problems, Carey said it would do damage to hoteliers, even create closures and hurt the broader tourism and hospitality economy in the city. Carey called the licensing bill, in effect, “a government takeover of the hotel industry.”

On July 18, New York City Councilwoman Julie Menin proposed Int. No. 991, a bill that would impose what the AHLA called onerous and unnecessary staffing requirements on local hotels and mandate other rules that would “needlessly disrupt hotel operations, threaten the successful franchise business model, and require some hotel owners to divest of their properties.”

On August 2, Menin introduced revisions to the bill that the AHLA said includes the following:

Creates a new hotel licensing structure that the city cannot afford to properly implement.
Mandates that hotel owners must be the direct employer of all housekeeping, room attendance, and maintenance staff.
Prohibits all NYC hotels from sub-contracting out key operational functions, directly harming small NYC businesses.
Forces some of NYC’s largest and most iconic hotels to close or be sold due to conflicts with federal tax law.
Eliminates the ability of hotel management companies to operate in NYC.
Creates one-size-fits-all minimum staffing and cleaning mandates that ignore individual hotel needs and guest preferences.
Will cause thousands of NYC hotel workers to lose their jobs.

New York City hotel owner and President and CEO of the Hotel Association of New York City Vijay Dandapani told Hotel Investment Today that the updated version does nothing to take away either the existential aspect with regard to financing or the monumental operational expenses and resultant losses for hotel owners and operators. “With regard to financing, the linkage to ‘service disruption’ remains via ‘rule making’ by the commissioner who has unfettered powers,” he said. “That is untenable for any prospective or current lender, developer or owner as there’s no certainty about the life of the hotel license.”

Dandapani added that operational bloat resulting from this includes mandatory 24/7 security coverage for any hotel over 100 rooms, which he said amounts to approximately $500,000 a year. “That is a death knell for many small hotels, many of whom have yearly revenues in the $10-$15 million range,” he added.

“There are many other business killing aspects that remain, including mandatory identification of all guests in a physical front desk location,” Dandapani said. “Ergo, no chance of using your digital key to go to your room to avoid a long line at the desk after a long flight. Ditto for mandatory room cleaning even with a ‘do not disturb’ sign.”

Carey said in the radio interview that the bill would impose new operating costs, mandates, requirements on staffing, limit the use of subcontractors and has been done so without input from the hotel industry. He said the association’s view is that the bill should be withdrawn from further consideration.

“The city council’s discussions regarding the Hotel Safety Act continue to exclude those who will be most affected by the legislation – hotel owners, management companies, sub-contractors, and tens of thousands of hotel workers,” Carey said in a statement. “It is imperative that all stakeholders have a real seat at the table. If this is a matter of public safety and crime, as has been claimed by Councilwoman Julie Menin (D-District 5) and the bill’s proponents, let’s review the facts and statistics to see what picture they paint. Advancing these claims with scant data and no public process will significantly damage the hotel industry, harm New York’s economy, and negatively impact both the city’s reputation and its fiscal health.”

Carey continued, “Simply stated, this proposal is bad for everyone: hotels, NYC’s tourism economy, guests, and hotel employees. The revised bill still imposes expensive and burdensome requirements on hotel owners and effectively prohibits hotel management companies from operating in the city. As it stands, these revisions do not resolve the catastrophic consequences of this bill, which could lead to hotel closures and mass layoffs of workers, while ignoring many operational realities and guest preferences. The effects of this abruptly introduced legislation will be far-reaching and potentially devastating.”