Business of Design

Why a New Proposal Might Kill New York’s Hospitality Comeback

A new controversial plan to require approval for every new hotel could endanger the city's post-pandemic recovery.

The Download: Arguing it will significantly reduce future tourism tax revenue, budget and city planning officials are decrying a new plan backed by Mayor Bill de Blasio and other New York City leaders to require every new hotel to win approval from the City Council.

What’s Happening: City officials maintain the proposal—which would put hotels in the same category of neighborhood-altering projects such as airports, helipads, racetracks, large stadiums, and drive-in movie theaters—would harm the economic recovery and urban planning. The plan has the backing of the hotel workers union, Hotel Trades Council, since new projects are often non-union. Restricting the development of such hotels, which generally offer less expensive accommodations than existing properties, would keep room rates high and prop up more luxurious hotels where many union workers are employed.

If set in place, the controversial new plan could severely constrain development and leave the city with inadequate hotel capacity. City budget officials have calculated that the legislation could cost $350 million by 2025 and as much as $7 billion by 2035 in lost tax revenue.

In Their Own Words: “It is directly contrary to what the administration ought to want to do in order to revive the city’s economy, put people back to work and reinvigorate its tax base, which has been severely damaged,” said Eric Kober, who spent nearly 40 years at the New York City planning department and now works at the conservative Manhattan Institute.

Surface Says: Now more than ever, New York needs the world to visit again. Creating scarcity and staidness in the hotel landscape would hurt the city’s allure by stripping it of its reputation as a place where you can always experience something new.

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