NYC Hotels Shift From Room Service To Public Service As Coronavirus Lingers

As New York City's hotel business has imploded, thousands of rooms are being repurposed to house hospital workers and people who have been exposed to the coronavirus.

The city will spend as much as $250M to compensate hotels that volunteer to house New Yorkers who have COVID-19, show symptoms of COVID-19 or have been exposed to the virus, New York City Emergency Management said.

Mayor Bill de Blasio announced earlier this month that the city would move 6,000 homeless from the shelter system into hotel rooms to mitigate spread, prompting some hotels to offer their rooms to frontline responders for free. 

Gov. Andrew Cuomo has also said he will sign an executive order allowing people displaced by the virus or helping with virus response to stay in hotel rooms for more than 28 days, without signing a lease agreement.

Even so, it is unlikely to generate enough help for the city’s hotel industry, which has been thrown into disarray amid sweeping closures and thousands of layoffs. “Not by a long shot,” Hotel Association of New York City CEO Vijay Dandapani said.

He said about 30,000 rooms will be used by the various programs, a fraction of the approximately 130,000 rooms available in NYC. Only half the hotels in the city have reported information about their operations to industry group STR in the last two weeks, an indication that many may be closed or empty.

“This is a calamity that is unlike one that we have experienced before,”  Dandapani said. 

He would not name specific hotels that are housing people who have been ill with the virus, citing the demands of patient privacy, but he did say that the situation is shifting as infection rate changes. As of Monday, there were more than 247,000 cases of the virus statewide, with the death toll above 14,000, Cuomo said in his daily address to the media. 

Dandapani pegged the rate hotel owners that are renting out rooms amid the crisis as between $100 and $170, though he said it varies. “There is nothing else in the marketplace, there are no tourists that are going to New York City,” he said.

Hotel occupancy has taken a nosedive since the state shut down March 20. From April 4 to April 11, there was a 69.8% year-over-year decline nationwide at 21% occupancy, according to STR. New York was down 71.7% year-over-year at 24% occupancy, that same data shows.

In New York City, the hotel market had already been significantly affected by sluggish room rates and swelling supply for a number of years. Occupancy rates, thanks to record numbers of tourists coming to the city, had remained relatively high compared to the rest of the country. But now, tourists are nowhere to be seen. 

“One of the biggest problems we are facing right now — whether you open or not — [is that] many will not have money to pay the real property taxes July 1,” Dandapani said, adding that there could be defaults as a result. “Some will simply not be hotels when we come out of this.”  

A NYCEM spokesperson told Bisnow that over 100 hotels and 15,000 rooms have offered to participate in the $250M plan, but declined to say which hotels. The city will decide who stays in these rooms based on recommendations from hospitals and health centers.

“We are working closely with agencies, hospitals and federally qualified health centers to provide these accommodations,” the NYCEM spokesperson said in a statement. “Hospitals and FQHCs can make referrals for patients who meet the eligibility criteria.”

Hilton teamed up with American Express to donate a million Hilton hotel rooms to healthcare workers nationwide. Locally, Hilton-branded Conrad New York Downtown, Millennium Hilton New York Downtown and Millennium Hilton New York One United Nations Plaza are all participating in the initiative in the city, Hilton spokesperson Laura Ford told Bisnow. 

Nationally, 15,000 hotels have volunteered vacant rooms for corona-related relief via the American Hotel & Lodging Association’s Hospitality for Hope Initiative, which links hotels and local governments, Skift reported. Some hotels will be compensated by emergency government agencies such as the Federal Emergency Management Agency, according to Skift.

Still, like most of the world, the industry is beginning to weigh when the most acute phase of the crisis might be over, and how its fallout may significantly impact room numbers in the city. 

“There was no shortage of [city] hotels that were under stress pre-Covid-19,” said LW Hospitality Advisors CEO Daniel Lesser, adding that smaller hotels with less public space may be the first to recover after the pandemic.  “On the other side of this, the net number of rooms in New York is going to decline. That may not be such a bad thing, to reset the fundamentals.”

CORRECTION APRIL 21 AT 10:30 A.M. ET: Hilton teamed up with American Express to donate hotel rooms to healthcare workers, not Hilton Hotels and Resorts. This story has been updated.