NYC City Council passes bill forcing hotels to dish out severance pay

Hotel industry pushed back on potential new legislation

New York /
Sep.September 24, 2021 02:00 PM

Francisco Moya (council.nyc.gov, iStock)

The City Council voted Thursday to pass a bill compelling hotel owners to provide severance pay to their out-of-work employees.

The bill, introduced by Council member Francisco Moya, requires hotels that either closed entirely or laid off 75 percent of their staff during the pandemic to provide severance to service employees for up to 30 weeks. Hotels can exempt themselves from the mandate by recalling at least 25 percent of employees by Oct. 11 and reopening by Nov. 1.

“This legislation is about protecting the livelihoods of these very workers, who are the backbone of NYC’s tourism economy, and incentivizing the revitalization of NYC’s hotel industry by getting workers back to work,” said Moya, who represents District 21 in Queens.

Under the legislation, employees eligible for severance pay would be owed $500 per week, for up to 30 weeks.

The Hotel Trades Council is among the bill’s backers. The union representing the city’s hospitality workers estimates nearly 60 percent of hotel employees — or about 30,000 people — are out of work.

The Real Estate Board of New York testified against the legislation, claiming severance payments would be an additional burden on struggling hotels.

In December 2020, hotel occupancy in the city was 36 percent, with the average daily rate at $130. The figures illustrate a sharp decline compared to December 2019’s 91 percent occupancy and average rate of $351, REBNY said, citing NYC & Company data.

“These businesses, which may have not earned meaningful revenue for well over a year, may simply not be equipped to do so,” REBNY said in its testimony.

Vijay Dandapani, president of the Hotel Association of New York City, similarly dismissed the legislation as “not a sustainable proposition.”

“Many City Council members are unaware of the extent of pain the hotel industry has,” Dandapani said.

Despite some travel and tourism reemerging in the wake of Covid vaccinations and relaxed lockdown measures, an April study by CBRE said New York’s hotel industry won’t recover to pre-pandemic levels until 2025.





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