WASHINGTON, D.C.—In testimony submitted to the New York City Council’s Committee on Economic Development, the American Hotel & Lodging Association (AHLA) raised concerns that provisions in the city’s proposed FY27 budget could increase costs for hotels and threaten jobs across New York City. AHLA urged policymakers to consider the cumulative impact of proposed tax increases and policy-driven costs on the hotel industry.
“Hotels are a cornerstone of the New York City economy, supporting hundreds of thousands of jobs and generating critical tax revenue,” said Rosanna Maietta, president and chief executive officer of the American Hotel & Lodging Association. “At a time when international travel demand has yet to fully rebound, it is essential that policymakers avoid imposing additional burdens that could slow the industry’s recovery. A strong hotel sector is vital to the city’s broader economic health, and we urge the City Council to pursue policies that support growth, investment, and competitiveness rather than measures that risk putting New York at a disadvantage.”
“Hotels are a cornerstone of New York City’s economy, supporting hundreds of thousands of jobs and generating billions in tax revenue each year,” said Sarah Bratko, vice president and policy counsel at AHLA, in her testimony. “As the city evaluates its budget priorities, policymakers must ensure that new policies do not unintentionally undermine one of New York’s most reliable economic engines.”
AHLA’s testimony raised concerns about proposed changes to the corporate tax structure and the pass-through entity tax, which could increase costs for many hotel owners, particularly small business operators structured as partnerships or S corporations, as well as the many small businesses that support NYC hotels. The association also warned that a proposed 9.5 percent increase in the city’s Real Property Tax (RPT) could further strain hotel finances as operating costs continue to rise.
“Hotels cannot relocate when operating costs become unsustainable,” Bratko said. “When taxes and costs rise too quickly, hotels have fewer resources to reinvest in their properties, support employees, and attract visitors in an increasingly competitive travel market.”
Hotels Are a Major Economic Engine for New York City
Hotels play a central role in New York City’s visitor economy, according to new data from Oxford Economics. Guests staying in city hotels spend approximately $38.4 billion annually across the five boroughs, supporting restaurants, retailers, cultural institutions, and small businesses.
Each hotel room night generates an estimated $1,168 in visitor spending, contributing to a projected $4.9 billion in local, state, and federal tax revenue in 2026.
The hotel and lodging industry supports nearly 264,000 jobs in New York City, representing roughly 5 percent of the city’s workforce. Since the pandemic, average hotel wages have increased more than 15 percent faster than wages across the broader economy.
Rising Costs and Travel Trends Continue to Pressure the Industry
Despite major upcoming events such as the FIFA World Cup and America250 celebrations, hotel operators are navigating significant cost pressures. Over the past five years, hotel operating costs have increased roughly four times faster than revenue growth, driven by rising labor, insurance, utilities, compliance, and construction expenses.
Local policies, including the 2021 Hotel Permitting ordinance and the 2024 Safe Hotel Ac,t have also increased operating costs, while global economic uncertainty continues to raise the cost of construction and renovations.
At the same time, international travel, a key driver of New York City’s tourism economy, has declined. In 2025, the New York City Tourism Office reported a five percent drop in international visitors. These travelers are particularly important to the local economy, spending an average of $4,000 per trip, significantly more than domestic visitors.
Declines in international visitation can therefore have an outsized impact on hotels and the broader network of businesses that rely on tourism.