Perhaps none has borne the brunt of the pandemic more than the hotel industry. More than a hundred hotels remain shuttered, and most credible industry analysts forecast meaningful recovery won’t occur before 2024.
Although the industry never fully attained revenue metrics that preceded the Great Recession, before the pandemic hotels constituted a nearly $11 billion industry that employed more than 55,000 people, most of whom were city residents. In less than a week, more than 75% of those revenues vanished into the ether, with nine out of every 10 employees furloughed or laid off—a devastating and existential blow to a pillar of the city’s economy.
Given the multiple tax burdens on hotels, the Hotel Association of New York City was arguing for a more equitable assessment process for hotel real estate even before the public health crisis. With no relief from the city, a significant contingent of the city’s hotels will default on their July 1 property tax bills; many will go out of business permanently. As if to add insult to injury, the interest rate on defaulted payments for hotels is set at the borderline usurious rate of 18%.
The Covid-19 crisis has made the cumulative burden on the hotel industry entirely untenable, resulting in an unprecedented liquidity and solvency crisis. In asking for relief, the industry underscored that a return to vibrancy for the city requires the continuance of a substantial number of hotels as part of our tourism infrastructure, borne entirely by the private sector.
While it is obvious that the de Blasio administration and the City Council are grappling with a massive deficit in revenues, failure to recognize the certain loss of a substantial number of stakeholders in an essential industry is regrettable and shortsighted.
The city eventually will surmount the travails brought upon by the pandemic, but rebuilding will be slower, inefficient and more costly without the city’s recognizing the need to ensure the vitality of its hotel stock.