New York City hotel owners have to pay more than $500 million to employees displaced by Covid-19, according to people familiar with an arbitrator’s recent ruling, a victory for tens of thousands of unemployed workers and a fresh setback for cash-strapped property owners.
The ruling represents the largest hotel-employee payout ever awarded in New York City, hotel owners and union representatives said. While the final amount of severance pay depends on a few factors, it is likely to be the biggest on record for any hotel-union group in the country, these people said.
The magnitude of the payments is heightening tensions between lodging owners and the hotel union as Covid-19 ravages New York’s hospitality business.
Corporate travel across the U.S. has collapsed, and after years of record tourism in New York City, visitors have dwindled. Broadway theaters are closed, and other attractions like museums and restaurants are operating at partial capacity.
Hotel owners say they have had to shut down operations throughout New York City, and even after they reopen, it might be years before their hotels can turn a profit. A number of New York hotel owners received federal assistance through the Paycheck Protection Program that helped them survive the early weeks of the pandemic, and some owners used part of those funds to support employees.