Vijay Dandapani, CEO of the New York Hotel Association (Getty, iStock)
How do you sell relief?
As the occupancy rate fell to 42.5%, the city’s hoteliers launched a web and television campaign on Monday to touch the hearts and minds of elected officials.
Specifically, they want financial help and a break on late tax payments.
“We need property tax relief. We had a liquidity crisis and now have a solvency crisis,” said Vijay Dandapani, president and CEO of the New York Hotel Association. The real deal.
The group hasn’t said how much it’s spending on the effort.
The trade group’s new campaign website, StayNYC.com, says: “Saving hotels would be a down payment on our recovery.” He adds, “Common sense measures like property tax debt relief and assessments that more fairly represent the current value of hotels will keep hotels open and workers employed.”
By debt relief, hotel owners mean an interest rate of less than 13% – they would prefer zero – on overdue property taxes. They made a similar call a year ago and released a report in December showing that their taxes as a percentage of income had tripled in 2020, to 30%.
The new website says that before the pandemic, the city’s hotels employed 50,000 people — largely ‘immigrants and people of color’ — accounted for $3.2 billion in revenue and supported $22 billion in global tourism spending.
“The future of hotels is even less certain,” said Dandapani, who hopes new Mayor Eric Adams and the revamped City Council will craft targeted measures that will lower assessments, reduce penalties for unpaid taxes and help hotels stay open.
The association is already suing the city in federal court to strike down a law mandating a severance package of $500 per employee for 36 weeks for hotels that did not reopen in November.
“It’s money that hotels just don’t have,” wrote David Paz, president of Omnia Group, owner of the Sister City hotel, in a Jan. 27 op-ed by Crain.
A few hotels have opened, perhaps to avoid the sanction, but Dandapani said 145 have closed since the pandemic began.
The city has also dealt a blow to hotel developers by requiring a special permit to build hotels, a law that is expected to stifle non-union hotel projects. The measure was passed in favor of the hotel workers’ union, although in a few years it could help existing hotels by limiting competition. A pre-law supply pipeline includes the opening of a Ritz-Carlton in May, the opening of a Virgin hotel this summer and the opening of the Fifth Avenue hotel this fall, all at Nomad.
Before Adams was sworn in, Dandapani told him the industry sought “safety and cleanliness.” But the ad campaign is more about money. Property taxes on hotels in the city are the highest in the country and “unfair, unjust and unsustainable,” the trade group leader said.
Of the city’s proposed new tax assessments, he said, “This does not reflect the fact that in the first year of the pandemic, revenues were down almost 65% from 2019 and 44 % in 2021,” he explained. “We need property tax relief in the short term.”
The new assessments, released on January 18, will affect taxes from July. But these were calculated by the city’s finance department as hotels bounced back. Their occupancy rate was 82% in December – the highest in two years – but plunged to 43% last week. “Omicron took the wind on our sales,” Dandapani said.
The ratings drive up average hotel billable values by 5.9% across the city. Many landlords plan to challenge their assessments before the March 1 deadline.
“You have to be in a cave in Afghanistan not to file,” Dandapani said.
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