New York City’s proposed fiscal year 2027 budget could increase hotel operating costs and put jobs at risk, according to testimony submitted by the American Hotel & Lodging Association (AHLA) to the City Council.
The industry group said planned tax changes and higher property taxes may place additional pressure on a sector already facing rising costs and uneven travel demand.
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Tax changes raise cost concerns
The AHLA highlighted several elements of the NYC budget proposal that could directly affect hotel finances. These include proposed adjustments to the corporate tax structure and the pass-through entity tax, which are widely used by small and mid-sized hotel operators.
A proposed 9.5% increase in real property tax is also a central concern. Industry representatives say this would add to fixed costs at a time when hotels are already dealing with higher spending on labour, insurance and utilities.
Hotel operators argue that rising taxes may limit their ability to reinvest in properties, maintain staffing levels and remain competitive in the global travel market.
Economic role of NYC hotels
The hotel industry remains a key part of the New York City economy. According to data cited in the testimony, hotels support nearly 264,000 jobs, accounting for around 5% of the city’s workforce.
Visitor spending linked to hotel stays is also significant. Guests contribute an estimated $38.4 billion annually across the city, supporting a wide network of businesses including restaurants, retail and cultural venues.
Each hotel room night generates roughly $1,168 in local spending, helping to produce about $4.9 billion in tax revenue in 2026.
Rising costs and weaker travel demand
Hotels in New York are facing sustained cost pressures. Over the past five years, operating costs have increased at a rate estimated to be four times higher than revenue growth.
Expenses linked to labour, construction, compliance and insurance continue to rise. Local regulations introduced in recent years have also added to operational costs for hotel owners.
At the same time, international travel to New York has not fully recovered. Official data indicates a decline of around 5% in overseas visitors in 2025, a segment that typically spends more than domestic travellers.
Industry representatives warn that the combination of higher taxes and slower international tourism could affect hotel profitability, investment and employment levels, with potential knock-on effects across the wider tourism economy.
