If you’re planning a trip to New York City, it looks like you might want to brace yourself for rising hotel prices and potentially lower service quality starting in July, as new labor contracts take effect. This is something industry experts recently mentioned.
A fresh contract, negotiated after some tough discussions leading up to the World Cup in New Jersey next month, boasts what unions are calling the “largest pay increase in nearly a century.”
Hoteliers are suggesting that these wage hikes will be absorbed by guests in the form of higher prices.
One hotel executive, who preferred to stay anonymous, described the deal as quite alarming, predicting that it would result in increased rates and a dip in service, remarking that “something has to be done.” The executive works closely with the Hotel and Gaming Trades Council, which represents a large number of hotel staff in the city.
According to hotel managers, it’s likely we’ll see reduced cleaning service hours and fewer front desk agents and concierges working at any given time. Restaurant and bar hours might also shrink.
Additionally, some luxury hotels might do away with evening turndown service altogether, and guests could be encouraged to limit their towel and sheet requests as a supposed nod to environmental sustainability—though it’s also a cost-saving tactic.
“When finances are tight, hotels will definitely cut back,” the executive noted. “For instance, the full breakfast might become a grab-and-go option.”
But experts have pointed out that price increases usually reflect demand, which tends to wane during the summer months.
Vijay Dandapani, leading the New York City Hotel Association, shared that room rates might not change right away, but there could be gradual increases over time.
The latest data from the Coster Group indicated that the average nightly rate for NYC hotels recently hit $385, just trailing Maui at $481.
The hotel association finds itself in a challenging position, especially with a trade union threatening a strike during a World Cup match next month, which could jeopardize revenue and tax income for the city and state, according to Dandapani.
In fact, New York City hotels already hold some of the highest wage averages in the country, around $40 an hour. The new agreement, made under strike threat, offers various employees—like housekeepers and front desk clerks—an average raise of about 5% annually over the next eight years, resulting in a significant 50% increase over the contract’s duration.
Apparently, this raise would push salaries to around $77,113 in the sixth year and eventually to $110,000. Front desk workers could see their rates jump from $41.31 to $62.51 per hour by the conclusion of the contract, while bell staff could go from $24.05 in tips to approximately $46.65.
Dandapani also mentioned a union proposal aimed at limiting housekeepers to cleaning no more than 3,500 square feet daily, with a potential pay raise for exceeding that. He called it a potentially disastrous move for the industry, one that could lead to closures.
From the union’s perspective, the new contract will provide significant financial security for hotel workers, who are deemed essential to the hospitality sector, stated union President Rich Maroko.
Union officials argued that it’s not simple for hotels to reduce labor costs, given that job protections exist within their contracts.
A union representative elaborated that decisions regarding job cuts or hour reductions must rely on occupancy levels and would require joint discussion, otherwise, they’d need to go through arbitration.
Meanwhile, Airbnb has criticized the hotel industry, attributing rising room rates not to workers but to what they describe as greedy practices. They’ve been involved in campaigns to restrict the home-sharing market, which includes supporting laws that have made it tougher for hosts in New York City.
Nathan Lotman, Airbnb’s director of U.S. policy, asserted that NYC hotel prices are four times the national norm, attributing it to past hotel strategies that have limited supply and inflated costs for visitors, ultimately affecting everyday New Yorkers.
Airbnb is now pushing the city to ease certain regulations that currently benefit homeowners wishing to rent their properties.
