New York City is expected to approve rules that would prevent opening new hotels. Specifically the City Council would have to approve new projects. In limited neighborhoods where this has been in place since the Bloomberg administration, no hotel project has started.
This will mean fewer hotel rooms in the city, higher room rates, and fewer visitors as a result. It will therefore mean less tax revenue (not just hotel taxes, but also sales taxes and income taxes from businesses serving out of towners). It will mean less business for Broadway, for restaurants, for taxi cabs that have struggled in the face of Uber and Lyft.
Even the city’s own experts think this is insane,
And in an internal memo obtained by The Times, the city’s top planning official warned that a more limited proposal — requiring a special permit for hotels in the Union Square area of Manhattan — could hamper the hospitality industry, without a viable urban planning rationale.
“We flag that to continue with this proposal could be seen as contrary to economic recovery principles and sound planning,” Marisa Lago, the director of the planning department, wrote last year in the memo to City Hall.
So why is this on the verge of happening? It benefits both incumbent hotel owners and hotel unions by shutting out competition.
- Limiting competition will make existing hotels more profitable, and unions can demand better wages from hotels that lose more money if shut down by a strike.
- Fewer hotels mean fewer hotel jobs yet unions still support this because newer hotels are generally non-union, at least initially.
The New York Times points out that Mayor de Blasio was endorsed by the hotel workers union in his delusional campaign to become the Democratic nominee for President last year, they spent heavily on ads for him, and this is payback on his way out the door.
Limiting development of hotels in New York City is bad for the U.S. as an international tourist destination. It’s bad for the city as a world financial center. And it exacerbates the fiscal problems of a city that’s already driving away the residents it relies on for tax revenue, putting itself in a position where it will have to try to squeeze those same residents for even more revenue. De Blasio will be gone, of course, so won’t face electoral consequences for the damage done.