Hotel Association of NYC Files Lawsuit to Strike Down Law to Bilk Closed Hotels

Mayor Signed Bill Earlier This Week to Require Shuttered Hotels to Pay Additional Severance as Tourism Industry Struggles to Bounce Back

NEW YORK, NY (10/08/2021) (readMedia)-- HANYC (the Hotel Association of NYC) filed a suit on Friday to strike down the bill signed by Mayor de Blasio earlier this week, which would require shuttered hotels to pay severance beyond the hundreds-of-millions-of-dollars already paid out by the industry during the pandemic.

The lawsuit, filed in the Southern District of New York, alleges that Intro. 2397-2021-A, known as the "Severance Law," violates state and federal laws, preempting New York State's Municipal Home Rule and the Employee Retirement Income Security Act of 1974 (ESIRA), respectively. The suit asks the court to void the law and seek an injunction to prevent anyone from enforcing it.

In testimony given on Tuesday in a brief virtual public hearing before the Mayor signed the bill and hosted an indoor rally with supporters, Vijay Dandapani, President & CEO of HANYC, warned that the legislation would place an extra burden on an industry struggling to get back on its feet that has been decimated by the economic effects of COVID-19. Vijay also explained the bill will stall the city's recovery by forcing hotels to shut down permanently.

"The hotel industry has been among the hardest-hit by COVID-19, shuttering hundreds of hotels, with many on the verge of bankruptcy. We're disappointed that the City chose to risk future tourism and our local economy by passing this legislation which forces hotels to pay money they do not have. Ultimately, this bill may force owners to close and leave New York altogether," said Vijay Dandapani, President and CEO of the Hotel Association of New York City. "By conservative estimates, the hotel industry won't fully recover until 2025 -- until then, the City should be doing everything it can to help us, not hurt us."

"Attacking hotels and their employees in the midst of the worst crisis the industry has ever faced is senseless in every way. It is as if the Council has purposely set forth on a course to destroy the New York City hotel industry and the jobs it supports. We cannot find a more destructive policy anywhere else in the United States," said Chip Rogers, president and CEO of the American Hotel & Lodging Association.

"Not only is this ordinance likely to drive hard-working entrepreneurs into bankruptcy, but it will have a chilling effect on new hotel projects throughout the city, discouraging new investments and business openings for years to come. The Hotel Association of New York City is right to mount its lawsuit. We hope that one day New York City leaders will work with the hospitality sector on the road to recovery rather than attacking an industry so important to creating and supporting jobs," Rogers said.

More than 200 New York hotels have closed during the pandemic, leaving tens-of-thousands of New Yorkers out of work. Before the pandemic, the hotel industry employed more than 50,000 people who are mostly immigrants and people of color, raised $3.2 billion a year in City tax revenue, and added $22 billion annually to our economy.

According to a recent CBRE study, hotels may not fully recover until 2025. According to Smith Travel Research, the latest hotel occupancy rate for a 12-month period is at 48 percent, compared to 86 percent for the same period in 2019. Pre-COVID, hotels had a disproportionately large property tax burden compared to other properties. Now, with industry revenue down more than 65 percent, an additional severance to employees of partially closed hotels will only continue to delay their recovery, or permanently derail it.


The Hotel Association of New York City (HANYC) is the oldest hotel association in the United States and one of the oldest trade associations in the nation. The Association is an internationally recognized leader in New York City's $5 billion tourism industry and represents nearly 300 hotels, which, together, employ approximately 50,000 employees. The Association advocates on behalf of its members in a variety of legislative areas and sets standards for training, best practices and cooperative initiatives with key New York City stakeholders.