Metropolis Council eyes massive tax reduce to assist motels, tourism rebound from pandemic

The New York Metropolis Council is so involved concerning the sluggish restoration of the Huge Apple’s $100 billion tourism market from COVID-19 that it’s contemplating dramatically slashing the native lodge tax to spur a sooner rebound, The Put up has realized.

The Lodge Affiliation of New York Metropolis is urging Mayor Eric Adams and the council to decrease the occupancy tax charge on lodge room stays from 5.875% to 2.875%.

The lodge occupancy tax is predicted to generate $255 million in income for metropolis officers for the fiscal 12 months ending June 30, in keeping with the mayor’s preliminary funds plan.

However research counsel town’s tourism market received’t absolutely bounce again to 2019 pre-pandemic ranges of enterprise till 2026.

“We have the hotel occupancy tax so high. I definitely think the tax burden is too steep,” mentioned Councilwoman Amanda Farias (D-Bronx), chairwoman of the legislature’s financial improvement committee.

The Lodge Affiliation of New York Metropolis is advocating to decrease the Lodge tax by greater than half.
Corbis through Getty Pictures

Farias mentioned there may be “momentum” behind slashing the tax charge by greater than half.

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“What the hotel industry is asking for isn’t too big a lift. Now is the time to be proactive to help the tourism industry. We don’t want to wait until 2026 for a comeback,” the councilwoman mentioned.

A report by the Lodge Affiliation discovered {that a} non permanent discount within the lodge occupancy tax from 5.875% to 2.875% for 2 years would enable for motels to extend the occupancy charges and generate extra income.

Lodges reduce 20,000 union jobs over the pandemic.
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Lodges shed 20,000 principally union jobs through the pandemic and that’s one other issue that council members are weighing.

“These are my neighbors who work at the hotels,” mentioned Farias.

The Lodge Trades Council, the union representing lodge staff, has additionally been pushing for presidency aid. It endorsed Adams’ profitable bid for mayor final 12 months and has endorsed Gov. Kathy Hochul within the gubernatorial race this 12 months.

Former Mayor Invoice de Blasio issued an govt order that briefly suspended the lodge tax from June 1 to August 31 of final 12 months, a three-month “holiday” that supplied a $60 million break to the battered trade.

Research counsel New York’s tourism trade received’t return to pre-pandemic ranges till 2026.
Corbis through Getty Pictures

The commerce group can be recommending that town waive for 3 years the 18% rate of interest it fees motels on tardy property tax funds. Many motels fell behind on their property taxes due to the lack of tourist-driven revenues throughout shutdowns and disruptions triggered by the pandemic.

They’re additionally asking for town to make use of decrease assessed values to decrease the property tax payments over the subsequent two years.

A Manhattan lawmaker whose district is affected by motels and vacationer spots agreed that the council has to behave.

Mayor Eric Adams
Mayor Eric Adams was endorsed by the Lodge Trades Council.
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“The pandemic decimated New York City’s hotel and tourism industries, and are still severely struggling in comparison to other major cities. While it’s encouraging to see more visitors walking our streets again, the City Council must take further action to revitalize these sectors,” mentioned Councilman Keith Powers, the principles committee chairman who represents Instances Sq., Central Park South, Midtown, Turtle Bay, Koreatown and the Garment District.

“Tourism is the backbone of New York, and it’s imperative that we’re doing everything in our power to bring it back in full force.”

Adams’s workplace had no touch upon whether or not he supported an enormous lodge tax reduce.

Former Mayor Bill de Blasio
Former Mayor Invoice de Blasio beforehand suspended the Lodge tax from June-August final 12 months.
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However his “100 Steps Forward” plan unveiled throughout his mayoral marketing campaign final 12 months supported suspending lodge property tax debt curiosity for 2 years “so that we do not push financially distressed hotels deeper into debt, forcing closures and layoffs.”

A report launched by the American Lodge & Lodging Affiliation final week projected that lodge enterprise journey income within the New York Metropolis market could be 55% decrease than 2019. That’s the second slowest restoration of any city market within the nation after San Francisco.

Since COVID-19 hit Gotham, greater than 115 motels have closed completely, leaving tens of hundreds of individuals out of labor, the lodge commerce group mentioned.

Amanda Farias
Councilwoman Amanda Farias (D-Bronx) says town’s lodge tax is “too steep.”

The mayor’s preliminary 2023 govt funds reported 5,000 fewer lodge rooms within the metropolis than in 2019, dropping from 124,000 to 119,000. In the course of the worst of the pandemic, there have been 30,000 fewer lodge rooms.

“Due to the Omicron variant, visitors cancelled thousands of hotel reservations toward the end of the month which caused occupancy to drop to around 65 percent,” the funds plan mentioned. “The forecast assumes collection growth will be subdued for the remainder of the year due to the uncertainty around the Omicron variant and its impact on tourism.”

In early December, the Metropolis skilled an 81.5% occupancy charge, the best in nearly two years, Metropolis Corridor’s funds evaluation mentioned.

However regardless of that improve, lodge occupancy charges stay a lot decrease compared to pre-pandemic ranges. In February 2019, the occupancy charge was 76.5%. In February 2022, the occupancy charge was 56.5%, the lodge affiliation mentioned.

The town noticed lower than half the variety of vacationers in 2021 because it did in 2019, and 6 million fewer than initially anticipated in 2021.

Whereas tourism numbers are projected to extend this 12 months, probably the most optimistic projections nonetheless fall wanting 2019’s numbers by greater than 10 million guests, Dandapani mentioned.

The gradual restoration of tourism may deprive metropolis coffers of probably lots of of hundreds of thousands or billions of {dollars} in revenues that assist pay for public companies, resembling policing and faculties.

Tourism-related tax income alone accounted for 59% of town’s $2 billion decline in tax collections through the first 12 months of the pandemic, plummeting by about $1.2 billion, in keeping with an evaluation by state Comptroller Tom DiNapoli’s workplace.

The lodge trade faces a property tax burden that’s double that of main US markets. Property taxes ballooned to a 30% share of lodge income in 2020, up from 9.4% in 2019 when tourism flourished, the commerce group mentioned.

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