City Council considers fat tax cut on hotels

Hotel lobby asks for occupancy tax rate to be set under 3%

New York /
Apr.April 25, 2022 09:30 AM
From left: City Council Member Amanda Farias and Hotel Association of New York City president & CEO Vijay Dandapani (Getty Images, New York City Council, iStock)

From left: City Council Member Amanda Farias and Hotel Association of New York City president & CEO Vijay Dandapani (Getty Images, New York City Council, iStock)

The hotel industry is still struggling to recover from the effects of the pandemic, and its lobbying group has an idea for the city to consider: lower the occupancy tax rate.

The Hotel Association of New York City, which represents nearly 300 hotels across the city, has the City Council considering a steep cut to the occupancy tax rate on hotel stays, the New York Post reported. The association is pushing the Council and Mayor Eric Adams to slash the rate to just below 3 percent, about half the current rate of 5.9 percent.

Such a steep reduction of the tax rate could be challenging for the city to stomach, even if it spurs the recovery of the hotel industry. The mayor’s preliminary budget plan forecasts $255 million in revenue from the tax during the current fiscal year.

Some politicians argue that a cut to the occupancy tax rate could help the industry recover ahead of schedule, though.

“What the hotel industry is asking for isn’t too big a lift,” council member Amanda Farías, who chairs the legislature’s economic development committee, told the Post. “We don’t want to wait until 2026 for a comeback.”

The Hotel Trades Council, which represents hotel workers and endorsed Adams, is also pushing for various relief measures, ranging from a temporary reduction in assessed property values to a waiving of the 18 percent interest rate on delinquent property tax payments.

The mayor’s office did not comment. It has previously shown support for relief measures for the hotel industry, including temporarily suspending hotel property tax debt interest.

Hotel occupany looked to be on the rise before the omicron variant complicated matters. In the week ending Dec. 11, occupancy hit 81.5 percent, the highest since the onset of the pandemic.

But it has dropped sharply since then. During the week ending on Feb. 19, hotels averaged a 56.5 percent occupancy rate, according to STR data. The occupancy rate dipped as low as 40.3 percent in early January.

[NYP] — Holden Walter-Warner





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