The Real Deal New York

REBNY, other industry groups battle hotel preservation bill

Leading trade association says new rules are unnecessary in light of active development

April 08, 2015 05:14PM
By Tess Hofmann

The Mandarin Oriental in Columbus Circle (inset: REBNY president Steven Spinola and Corey Johnson)

The Mandarin Oriental in Columbus Circle (inset: REBNY president Steven Spinola and Corey Johnson)

The Real Estate Board of New York and other industry organizations are fighting City Council legislation that would make it trickier to convert existing hotels to residential or other use.

The bill, introduced by Council member Corey Johnson in December, would require owners of hotels with more than 150 rooms to receive a special waiver if they want to convert more than 20 percent of their hotel space to anything else.

At a Council hearing last week, REBNY submitted testimony opposing the bill and claimed that it is unneeded in the face of a “thriving” hotel and tourism industry.

The trade group said the annual number of visitors to New York City leaped to 54.3 million in 2013 from  37.8 million in 2003. It said that 30,000 hotel rooms have been added in the past decade, and another 23,000 are projected by 2017. Any conversion of hotel space, REBNY argued, would be offset by new construction.

REBNY also took issue with a hardship provision of the bill, under which hotel owners could get the restriction waived if they could prove it was not economically feasible to continue operating the space as a hotel.

“No property owner wants an as-of-right use of their property to be subject to a discretionary government review,” REBNY’s testimony states. “The vague standard of a ‘reasonable financial return’ only highlights another of the bill’s flaws and reinforces a view that this proposal lacks a reasonable justification and is of questionable merit.”

The Partnership for New York City, an influential pro-business group, and the Hotel Association of New York City also showed up to fight the measure.

“This bill will have the exact opposite result from what it is trying to achieve — it would only hurt the growth of the hotel industry in NYC by reducing the construction of new hotel rooms and preventing the creation of jobs,” the hotel association said in a statement.

Government proponents, however, said that over the past 11 years, a full 3,600 rooms in 14 hotels have been converted to luxury residential use.

“The loss of such a high number of hotel rooms throughout the city is concerning,” said James Patchett, chief of staff to Deputy Mayor for Housing & Economic Development Alicia Glen. “The strength of New York City’s tourism industry relies greatly on diversity in the hotel marketplace.”

According to Patchett, few full-service luxury hotels have been built in the city since the opening of the Mandarin Oriental at Columbus Circle in 2003.

Jobs are another area of concern for proponents of the bill. Hotels provide one job for every occupied room, while high-end residential developments provide one job for every 10 rooms, according to Patchett. Furthermore, hotel jobs are seen as a stable path to the middle class. A former floor supervisor at Flatotel Hotel in Midtown testified about how she and 100 coworkers lost their jobs as a result of a residential conversion.

The bill has 34 sponsors in the City Council. Johnson was not immediately available to comment.


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