In follow up to the New York City Department of City Planning’s (DCP), January 22nd, public hearing on the Draft Scope of Work for the City’s proposed Hotel Special Permit text amendment, there were several speakers both in support of and in opposition to the proposed legislation.  Of note, were five elected officials who testified in support of the Hotel Special Permit, with a unified message, that the development of hotels takes away opportunities for affordable housing in this City, and therefore, hotels must be regulated at a higher level than other uses.  Generally, the opposition cited to the City’s failure to provide a land use rationale for the Draft Scope of Work, the lack of any defined issue or specific policy objective that this proposed Hotel Special Permit seeks to address and the potential impact of the proposed Hotel Special Permit on the City’s economic recovery.

A few days prior to the public hearing, DCP released a Hotel Demand Market Analysis which studied the anticipated effects of the proposed Hotel Special Permit for all new hotel development.  The analysis notes that in 2019 there were 66 million visitors to NYC and tourism was the 7th largest industry in NYC.  The analysis anticipates a recovery of the tourism industry by 2025, and looks at the effects of the proposed Hotel Special Permit text amendment through 2035.

The analysis acknowledges that the proposed Hotel Special Permit may have “potential long-term impacts on the tourism industry, an important economic driver in New York City that generated $71 billion in economic activity and $7 billion in local tax revenue in 2019.” Specifically, the analysis notes that approximately 40,000 hotel rooms have gone off-line since the start of the pandemic, and, assuming all of the 40,000 off-line hotel rooms come back by 2025, the City will have a shortfall of approximately 21,500 rooms by 2035, thereby leaving the City unable to meeting the expected tourism demand.  The analysis also states that the unmet demand will be higher if a portion of those 40,000 hotel rooms do not recover from the pandemic closures.

Ultimately, the study finds that the proposed Hotel Special Permit text amendment “may also impede future hotel supply in the City.”  In support of this, the analysis cites to the M1 hotel Special Permit, which went into effect in 2018, and noted that the M1 hotel Special Permit “has halted new development in these areas…”, as “there has not been an application filed for a new hotel special permit in an M1 district.”  The analysis acknowledges that the impacts of the proposed Hotel Special Permit are wide-reaching, affecting industries such as “food and beverage, retail, entertainment and transportation.”

The City has not yet announced a date on which they expect to release their proposed text.