Hotel Union, Ownership Group Reach Deal To Clear Path For Lightning Rod Licensing Bill

New York City hotels could soon have to pay for a license every two years, as a contentious bill written this summer got the backing of a major industry association that previously opposed the legislation.

The licensing requirement is one part of Int. 991, known as the Safe Hotels Act, the introduction of which caught the industry by surprise this summer. That requirement, as well as a rule barring the use of subcontractors to staff hotels, provoked an outcry among industry associations.

New York City Council Member Julie Menin introduced the bill in July, backed by the powerful Hotel and Gaming Trades Council union. But the council, union and the Hotel Association of New York City worked in recent weeks to update the policy and relax some of the restrictions, and now the landlord group has agreed to back the bill, Politico reported.

The bill no longer forces hotels to directly employ roles that are normally filled via subcontractors, such as workers who handle laundry or security duties. It also allows hotels to use subcontractors for technical roles like engineers — a measure not previously permitted — winning the support of HANYC.

There are additional changes to language that could have harmed hotel owners’ standing with investors. Real estate investment trusts are legally forbidden from operating a hotel business, meaning hotel REITs must subcontract the operation of the hotels to third parties. REITs have been exempted from the updated version of the bill, Politico reported.

“The latest ‘B version’ of Intro 991 includes modifications that address some of HANYC’s most serious concerns,” Vijay Dandapani, president and CEO of HANYC, said in a statement. “We thank the bill’s sponsor for these changes, and withdraw our objection to the passage of the legislation if these changes remain in place.”

Following the agreement, Menin announced that a hearing date for the latest version of the bill has been set for Wednesday.

The Coalition for Hotel Subcontractors, which was formed last month to oppose the legislation, Bisnow first reported, declined to comment on the latest version of the legislation. But other trade associations remain opposed to the bill, including national industry giant the American Hotel and Lodging Association and the NYC Minority Hotel Association. 

“A significant contingent of New York City hotel owners are breathing a huge sigh of relief with the latest version of the legislation,” Kevin Davis, JLL’s Americas CEO for hotels and hospitality, told Bisnow in a statement. “Another large share of owners remain deeply unsatisfied.”

The bill’s language is still harmful to minority hotel owners because of the additional burden the licensing requirements put on lower-cost properties, Mukesh Patel, a member of the NYC Minority Hotel Association, said in a statement.

“It will force many small, minority-owned hotels to close, costing thousands of jobs, and room rates across the city to skyrocket. HANYC has sold us and New York City out,” said Patel, whose company, Globiwest Hospitality, owns six NYC hotel properties. “We urge Council Member Menin to reject this language and call out this blatant discrimination for what it is.”

Kevin Carey, interim president and CEO of the American Hotel and Lodging Association, said in a statement that the bill would cause “significant economic harm — primarily to small, family-owned hotels” and the minority-owned businesses that support those hotels. AHLA will advocate for a simple licensing bill, he said.

“There is no question that this bill, if passed, will cause many of New York City’s small businesses to close and thousands of hard working New Yorkers to lose their jobs,” Carey said. “We cannot accept any legislation that causes such disparate impacts across the industry.”