Dive Brief:
- On Tuesday, the American Hotel & Lodging Association submitted testimony to the New York City Council that expressed concern about the budget proposal for fiscal year 2027, claiming it could increase costs for hotels and threaten jobs across the city.
- The proposal, which specifically seeks to increase the corporate tax and change the pass-through entity tax, would drive up prices, including for New York hoteliers, Sarah Bratko, vice president and policy counsel at AHLA, said in the testimony. Meanwhile, New York Mayor Zorhan Mamdani’s “threat to implement a proposed 9.5% increase to Real Property Tax poses real challenges to the industry,” she said.
- Price hikes brought on by the proposed policy stand to negatively impact New York hoteliers and, in turn, the city’s tourism landscape, Bratko detailed. The testimony comes as hotel owners nationwide report rising operating costs as a top concern, according to an AHLA survey, also published Tuesday.
Dive Insight:
If New York hotel owners are left to absorb higher taxes based on the proposed policy, they will “have fewer resources to dedicate to improvements and upgrades necessary to attract visitors in a highly competitive market,” Bratko said in the testimony.
“We saw this play out in San Francisco, where a struggling hotel industry was confronted with ever increasing taxes and unrealistic policy decisions,” Bratko said. “Described as a doom loop after the pandemic, many businesses, including major hotels, closed.”
Now, as New York weighs its own budget decisions, “it must not lose sight of how profoundly its policies impact the hotel industry — one of the city’s most dependable generators of billions in tax revenue,” Bratko said. According to AHLA research, each hotel room night in New York generates an estimated $1,168 in visitor spending, which is expected to contribute $4.9 billion in local, state and federal tax revenue in 2026.
The proposed tax increases could have long-term negative impacts on New York’s hotel industry, especially as the city’s hoteliers face rising operating expenses from policies such as the 2024 Safe Hotel Act, Bratko said.
Meanwhile, the cost pressures that New York hoteliers are facing are compounded by rising labor, insurance, technology and goods and services costs that are impacting hotels nationwide. According to a recent AHLA survey, U.S. hoteliers say operating costs remain their biggest challenge in 2026.
“Hoteliers are resilient, but the cost pressures they’re facing are very real,” AHLA CEO Rosanna Maietta said in a statement. “From rising insurance and energy expenses to workforce shortages, hotels are navigating significant operational challenges.”
Cost pressures aren’t likely to ease in the near term, as uncertainty in the global economy continues to drive up operating, construction and renovation costs, Bratko noted in the testimony. “It is more expensive to run a hotel today and revenues are not keeping pace with expenses,” she said.
To mitigate challenges in New York, AHLA will work with the City Council to “advance policies that promote job creation and sustained economic growth for New York City,” Bratko said in the testimony. An AHLA spokesperson told Hotel Dive Wednesday that the association will advocate for policies that “support the vibrancy of the hotel industry” such as workforce development, and push for more funding to boost tourism, especially given the recent decline in international inbound demand.
In January, Mayor Mamdani issued a final rule banning hotels across New York and the country from charging consumers hidden “junk fees” — a move that garnered support from the Hotel Association of New York and other industry organizations.
Neither the New York City Council nor the New York City Mayor’s Office could be reached for a Hotel Dive request for comment.
