The New York City Council recently voted to pass a bill that will require hotel owners to provide severance pay to their employees who are out-of-work.
The bill requires hotels, that either entirely closed or laid off 75% of staff during the pandemic, to provide severance pay for up to 30 weeks. Eligible employees will be owed $500 per week for up to 30 weeks. There is an exception, however: hotels will be able to exempt themselves if they recall at least 25% of employees by October 11th and reopen by November 1st.
According to Council Member Francisco Moya, who introduced the bill, “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.”
Support and Opposition
Amongst others, the Hotel Trades Council is in support of this bill. The union, which represents nearly 40,000 hotel and gaming workers in the New York City metropolitan area, estimates that “ nearly 60% of hotel employees — or about 30,000 people — are out of work.”
In opposition is the Real Estate Board of New York, which testified against the legislation on the basis that severance payments will constitute yet another burden on hotels that are already struggling to survive. According to REBNY, “these businesses, which may have not earned meaningful revenue for well over a year, may simply not be equipped to do so;” according to NYC & Company data, “in December 2020, hotel occupancy in the city was 36% with the average daily rate at $130 – this illustrates a sharp decline compared to December 2019’s 91% occupancy and average rate of $351.” Per an April study conducted by CBRE, “despite some travel and tourism reemerging in the wake of Covid vaccinations and relaxed lockdown measures, New York’s hotel industry won’t recover to pre-pandemic levels until 2025.”
In a statement released by Mayor Bill de Blasio, he explains that “this legislation is about justice for working New Yorkers and giving our hotel workers their fair share. The tourism sector is critical to New York City, and having hotels reopen and employees back to work will supercharge our recovery.” In a similar vein, Council Member Moya added “this legislation is not only providing our city’s greatest ambassadors with a much-needed economic lifeline, we are also protecting the livelihoods of families and revitalizing New York City’s hotel industry. We are already seeing the impact of this legislation with two major NYC hotels announcing they’re reopening, representing 1,000 jobs and counting. I look forward to seeing more hotels reopening, more people getting back to work, more tourism, and a better and stronger NYC.”
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