The Future of Hotel Development in NYC
Re: Citywide Hotels Text Amendment
Good afternoon I’m Adam Friedman, Director of the Pratt Center and I appreciate the opportunity to testify in support of the Hotel Special Permit requirement.
A Special Permit will give host communities and their elected representatives an opportunity to address any potential land use conflicts such as noise, traffic, sanitation and other quality of life impacts while increasing local employment opportunities and it will help stabilize the hotel sector.
In 2015 Pratt Center published Hotel Development In NYC: Room For Improvement which called for a citywide special permit for hotel development and we recently published Still Room For Improvement, an addendum to Room.¹
Three conclusions that are clear and frame this issue:
- Hotels, particularly when they begin to cluster, can cause land use conflicts around noise, traffic, sanitation, and can lead to a change in neighborhood character. The resolutions of the community boards provide ample evidence of this. In addition, Pratt's first study Identified Instances where hotel development conflicted with 197a plans and other articulated city policies and community visions.
- The tourism industry is critical to the city’s economic wellbeing both as a direct generator of jobs and tax revenues, and tourist spending is essential to the city’s art and entertainment sectors and therefore to the city’s creative vitality.A particular characteristic of the industry is the high average annual wage in accommodations which is over $67,000.
- But there are warning signs for the hotel industry. Even before the pandemic, the Revenue Per Available Room was declining and some well-established hotels were closing or downsizing.
So how to reconcile the imperative to address the land use challenges presented by hotel development with the imperative to provide support for this critical industry?
The land use challenges should be addressed through the special permit implemented on a citywide basis.
As Commissioner Ortiz and others mentioned, the DEIS suggests this will lead to a deficit in hotel rooms with tourists and their dollars being turned away. But this finding is off for at least two reasons:
First, the projections of the growth in tourism are overly optimistic and so the projected gap is overstated. The nature of travel is changing, particularly business travel. This is not just because of the pandemic but because of zoom and the surge in remote work which is barely mentioned in the DEIS. We have all gained a level of zoom competence and acceptance of the remote experience. Consequently, the judgement calls about whether to travel at both the individual and the corporate policy levels, are being recalculated.
In addition, businesses committed to environmentally sustainable practices are increasingly limiting their allowance for travel. The Pratt report cites specific changes In corporate policy Including by Microsoft.
Second, if there is a deficit in hotel rooms, it is not caused by a special permit or even strictly land use challenges. Rather any deficit would be the result of the interplay of hotel development, operations, market forces and financing. The revenue per available room, an indicator of the industry’s wellbeing, was dropping before the pandemic. And that is putting job-quality at risk. The situation requires a different set of tools beyond land use to address. A special permit requirement will add stability to the hotel industry. It will create an opportunity for communities and their elected representatives to address potential issues, promote resident employment, and help weed out the riskier projects and less well capitalized operators.
I urge you to move forward with implementation of a hotel special permit on a citywide basis.
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