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NYC proposes regulations impacting non-union hotels

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NYC proposes regulations impacting non-union hotels
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Gary Leff Chief Financial Officer | View from the Wing

New York City aims to regulate non-union hotels by banning the outsourcing of key functions such as housekeeping and food and beverage services. This move is intended to make it easier for workers to unionize, as hiring full-time employees is often more expensive than contracting out specific hours.

This regulation could render non-union hotels less competitive, making it less appealing to remain non-union and facilitating the organization of hotel staff. However, increasing operational costs may force some properties out of business in a city where hotel room availability is already limited.

Several factors contribute to this tight inventory. Over 10% of hotel rooms have been repurposed to house migrants, Airbnb has been largely banned, and new hotel construction faces significant restrictions. Hotel workers' unions have an effective veto over new projects.

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Despite these challenges, average room rates have increased by 22.5% since 2019, with hotel occupancy around 80% through May. This rise occurs even though business travel has not fully recovered, particularly on the coasts, while leisure destinations generally outperform major urban areas.

The hotel workers' union in New York City wields considerable political influence. It has blocked projects that would convert hotels into residential housing or homeless shelters, maintaining high rents and protecting jobs but also affecting the condition of hotels.

"The Hotel Trades Council ranked among the top independent spenders in the election cycle of 2017," reported The New York Times. "All 26 City Council candidates endorsed by the union won." Some of these officials joined powerful land use and zoning committees, granting the union significant sway over building decisions in New York.

The union argues that the bill aims to reduce crime, which seems unusual given that their members are not typically present on-site. There is skepticism about whether small hotel operators can manage security better than contracted specialists. Critics suggest that crime issues stem more from those attracted to lower-end hotels rather than from outsourcing practices.

With crime cited as a justification, the union acknowledges that higher operational costs leading to property closures might be seen positively from their perspective.

(HT: @crucker)

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