New York hotel property taxes skyrocket to 30% of revenue: report
New York City hotels have long been haunted by high property taxes, but a further increase has made the expense difficult for the industry to bear.
Property taxes hit 30% of revenue in 2020, a huge increase from 9.4% in 2019, according to a report by the New York Hotel Association. The group detailed the average growth in the property tax burden over the past decade, up from around 7% of total revenues in 2011.
In 2011, property tax reached $ 154,171, spread over 80 assets, with total revenue of $ 2.2 million. In 2019, property tax was $ 129,464, spread over 52 assets, for total revenue of $ 1.4 million.
Vijay Dandapani, chairman and chief executive of the business group, said most, if not all, hotels are contesting their property tax assessments. He believes most will go to the tax commission because the finance ministry is unlikely to give in.
New York remains in the high end among other major markets, with property taxes of 8.2% in Chicago, 4.4% in Washington, DC, 4.1% in Los Angeles, 4% in San Francisco and 3 , 3% in Miami.
The association had previously said that nearly 200 hotels in the city were closed between May 2020 and June 2021, with almost half of them still closed in mid-November. The report noted how industry lows threaten the city’s overall economy: In a typical year, hotels raise $ 3.2 billion per year in municipal tax revenue and add $ 22 billion per year. year to the economy.
The group recently reached a climax with the city after Mayor Bill de Blasio signed a bill in October requiring closed hotels to reopen or pay severance packages to their unemployed staff. HANYC filed a trial ask the court to overturn the law and seek an injunction.
In a statement, Dandapani cited the same detailed finding in a CBRE study released in April. The company predicts that the industry will not return to pre-pandemic operations until 2025, with revenue per available room reaching 2019 levels by 2024, with occupancy rates reaching 74% in 2022 and 86% in 2025.
In anticipation of the long road ahead for the industry, Dandapani called on city officials to act.
“The City must suspend penalties on late payment of property taxes, which are piling up at an exorbitant rate,” said Dandapani. The City should do everything to help hotels and the tourism industry get back on their feet.