Earlier this month Blakely Hotel employees ratified their first union contract. A week later the hotel’s owner told them he was shutting the place down.
But there is no labor war at the Blakely, both the owner and Hotel Workers Union say. (In fact, they are talking about how some of the union jobs can be saved.) Rather, the decision to close after 20 years reflects the challenges facing the hotel industry as competition intensifies and some hotels cut costs by outsourcing work to nonunion contractors.
“The financial difficulties that the Blakely Hotel has encountered are symptomatic of the problems we are seeing across the hotel industry in New York City,” said Richard Born, founder and co-owner of BD Hotels, which owns and operates the Blakely.
The 118-room Blakely, at 136 West 55th Street, has been struggling in part because of the rapidly increasing number of hotel rooms in New York City, according to Born. He said his hotels are particularly vulnerable because they do not farm out services.
“The extraordinary growth in the city’s hotel room inventory has created a serious challenge for the entire hotel industry, particularly for hotels such as mine that refuse to cut basic services (like daily room cleaning), are committed to ensuring that there is no criminal activity on our property, and that take responsibility of our own employees and the services they provide by not subcontracting out work to third-party agencies,” his statement said.
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As tourism in the city has reached record highs virtually every year since the early 2000s — a streak interrupted only briefly by the Great Recession — hotel developers have responded with dozens of projects. More than 20 hotels opened in the five boroughs last year, adding about 4,000 rooms and pushing the citywide total to roughly 123,000, according to NYC & Company.
The room count is expected to reach 144,000 by the end of next year. Many of the newer ones have nonunion staffs. Blakely staffers unionized last June.
Their union, the New York Hotel & Motel Trades Council backed up the owner’s assertion that the closure had nothing to do with the contract that workers ratified Jan. 8. On Jan. 15, hotel general manager Fred Hartman — a week before telling TRD he knew nothing about the hotel closing and people being laid off — sent a letter to Blakely Hotel employees saying the hotel was shutting down and employees would be laid off starting in mid-April.
“The entire hotel will close,” Hartman wrote. “This action is expected to be permanent.”
A notice was filed with the state’s Department of Labor that same day, saying the hotel could shut down and let go of 54 employees in the spring.
But the hotel could become something else, saving some of its workers’ jobs, according to the statement from Born.
“The Blakely Hotel and the union that represents its workers are in negotiations over the potential change in use of the hotel,” Born said. “Although no final decision has been made as to the ultimate operation, ownership will continue to work with the union to minimize the impact on workers.”
A group of investors led by Born and Ira Drukier bought the 17-story hotel in 2003 for $14.6 million.
“We developed the Blakely Hotel 20 years ago and have operated it since that time,” Born said in his statement. “We now face a difficult choice about the future of the property. No one is sadder than me to have to make this choice.”