Briefing at a Glance

  • On Tuesday, the American Hotel & Lodging Association (AHLA) submitted testimony to the New York City Council expressing concerns about the Fiscal Year 2027 budget proposal, arguing that it could increase hotel operating costs and jeopardize jobs across the city.
  • The proposal seeks to raise the corporate tax and adjust the pass-through entity tax, which would increase costs for various businesses, including New York hoteliers. In her testimony, AHLA Vice President and Policy Advisor Sarah Bratko stated that, meanwhile, New York City Mayor Zorhan Mamdani "threatens to implement a proposed 9.5% property tax increase, presenting real challenges for the industry."
  • Bratko detailed that the price increases resulting from the proposed policies would negatively impact New York hoteliers, which would in turn affect the city's tourism landscape. The testimony comes as, according to an AHLA survey also released on Tuesday, hotel owners nationwide generally rank rising operating costs as their top concern.

Deeper Insight

In her testimony, Bratko stated that if New York hotel owners are forced to bear higher taxes due to the proposed policies, they will "have fewer resources to invest in enhancements and upgrades to attract visitors in a competitive market."

"We saw this in San Francisco—a struggling hotel industry facing increasing taxes and unrealistic policy decisions," Bratko said. "Described as a 'doom loop' after the pandemic, many businesses, including major hotels, closed down."

Now, as New York weighs its own budget decisions, it "must not overlook the profound impact its policies have on the hotel industry—one of the city's most reliable sources of billions in tax revenue," Bratko stated. According to AHLA research, each hotel room night in New York is expected to generate approximately $1,168 in visitor spending, and is projected to contribute $4.9 billion in tax revenue to local, state, and federal governments in 2026.

Bratko noted that the proposed tax increases could have long-term negative effects on New York's hotel industry, especially as hoteliers in the city face rising operating expenses from policies such as the Safe Hotels Act of 2024.

Meanwhile, cost pressures on New York hoteliers are further exacerbated by increases in labor, insurance, technology, and the costs of goods and services, which are affecting the national hotel industry. According to a recent AHLA survey, U.S. hoteliers indicate that operating costs remain the biggest challenge in 2026.

"Hoteliers are resilient, but the cost pressures they face are very real," AHLA President and CEO Rosanna Maietta said in a statement. "From rising insurance and energy costs to labor shortages, hotels are managing significant operational challenges."

In her testimony, Bratko pointed out that cost pressures are unlikely to ease in the short term, as global economic uncertainties continue to drive up operating, construction, and renovation costs. "It costs more to run a hotel today, and revenue is not keeping pace with expenses," she said.

To alleviate the challenges facing New York, AHLA will work with the City Council to promote "policies that foster job creation and sustained economic growth in New York City," Bratko said in her testimony. An AHLA spokesperson told Hotel Dive on Wednesday that the association will advocate for policies supporting "the vitality of the hotel industry," such as workforce development, and will push for increased tourism promotion funding, especially in light of recent declines in international visitation demand.

In January, Mayor Mamdani issued a final rule banning hotels in New York and across the nation from charging consumers hidden "junk fees"—a move supported by the New York Hotel Association and other industry organizations.

As of press time, the New York City Council and the Office of the Mayor of New York had not responded to Hotel Dive's requests for comment.