NYC Hotel Owners Owe Workers $500M Due to COVID Displacement

An arbitrator's decision means another major headache for hospitality operators

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New York City hotel owners will have to pay more than $500 million to employees displaced by COVID, after an arbitrator reached a decision in a dispute between a trade association for owners and the New York Hotel and Motel Trades Council. The Wall Street Journal reported news of the decision on Wednesday morning.

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The pandemic’s decimation of the city’s hospitality industry led to the dispute that led to the historic payout, which is believed to be the largest of its kind in New York City history for hotel employees. The majority of the city’s hotel rooms shuttered at least temporarily since the COVID outbreak started in March, and 2,700 were expected to remain closed permanently, according to an analysis from PricewaterhouseCoopers.

The New York Hotel and Motel Trades Council, which is comprised of more than 39,000 members, had been seeking compensation for workers displaced due to these closures and to the general rockiness of an industry whose recovery still seems far off. That rockiness has led to open talk of converting some shuttered city hotels into homeless shelters, senior care facilities, and apartments or condominiums.

The dispute with owners hinged on an earlier arbitration decision that said that owners and operators who decide to remain closed indefinitely must pay their laid-off workers the severance they would have gotten if the hotel had closed permanently. The final severance packages for employees has yet to be decided, and roughly 75 owners are responsible for the $500 million in payouts. The city has more than 200 union-staffed hotels, per WSJ.