New York City hotel owners were ordered to pay employees affected by the coronavirus pandemic more than $500 million in an arbitration ruling, The Wall Street Journal reported.

A drop in tourist footfall to New York City due to its place as a COVID-19 epicenter is now having knock-on affects on bond markets linked to borrowing and support lent to the sector. Commercial mortgage bonds are now showing strain, with the Hotel Association of New York City saying if just half of the 640 hotels in the city survive the crisis, it would be a “great” outcome.

Twelve years after the housing and mortgage markets’ collapse threw the United States into financial distress not seen since the Great Depression, market watchers are again on the lookout for a possible new banking crisis spawned by upheaval in the U.S. commercial real estate sector.

More bad news for New York City’s hotels — and the loans they’re propping up — is on the horizon.

New York’s hotel industry is in crisis, with four out of five properties underpinning commercial mortgage bonds now showing strain under the weight of coronavirus and investors worrying whether hoteliers will be able to make good on their loans.

New York hotels are facing an immediate crisis with a wave of foreclosures due to COVID-19. The year-over-year revenue per available room, a metric used to gauge hotel occupancy health, has decreased 50% in 2020.

John Farrell and his wife booked a US$1,000 (RM4,140) room in the morning and were in New York hours later for their one-night stay. The couple is part of a new local and last-minute clientele keeping the lights on at the city’s most luxurious hotels now that the coronavirus has chased off the international jet set.

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