New York City’s hotel owners have long dreamed of lowering the tax that the city imposes on visitors who book rooms. Now, with President Donald Trump’s tariffs threatening to deter tourists who generate billions of dollars for the city each year, the industry may have found its moment.
The Hotel Association of New York City this week launched a campaign to lower the city’s 5.875% occupancy tax to 3% as part of the upcoming budget due June 30. Their “StayNYC” campaign follows a failed 2022 attempt to lower the rate by a similar amount to spur a quicker pandemic recovery.
But there are signs that this time could be different: The powerful Hotel and Gaming Trades Council, a hotel workers’ union, is supporting the campaign after not publicly backing it last time, the union told Crain’s. And Mayor Eric Adams, who similarly stayed silent during the previous attempt, said Tuesday that his administration was “looking at the possibility of dropping the tax so that we continue to be competitive.”
The local hotel industry has prospered in recent months thanks to rising tourism, a crackdown on Airbnb and an artificial room shortage caused by the city’s use of hotels to shelter migrants. But there are already signs that Trump’s global tariffs will discourage visitors — including Canadians, about 1 million of whom visited the city last year. The city welcomed 64 million tourists last year, and visitors generated some $79 billion for the city and state, according to city estimates.
“Our industry was hit hard by Covid shutdowns and is taking a hit again because of the new tariffs,” said Vijay Dandapani, president and CEO of the Hotel Association. The group plans to boost the campaign with multi-platform ad spending in the “high six figures,” a spokesperson said.
The association emphasizes that the occupancy tax is charged to tourists, not hotel owners. The 5.875% rate is on top of an 8.875% sales tax and $2 daily room fee.
But reducing the tax, which is paid to the city, would pose its own fiscal risks: The city collected $757 million from the occupancy tax in 2024, according to the comptroller’s office.
Rich Maroko, president of the HTC union, told Crain’s in a statement that lowering the levy “will attract more visitors and boost their local spending, which is a smart way to head off potential headwinds to the city’s tourism economy.”
“This tax adjustment is good for workers, city residents, and the city’s tax base,” Maroko said. HTC is among the city’s most powerful unions, having helped elect Adams and multiple members of the City Council. Although it spars with the Hotel Association on labor-management issues, the groups’ interests often align on policies that boost the hotel industry as a whole.
The city first established the occupancy tax in 1970 as a flat fee based on the room’s cost, before changing it to 5% in 1986. It later rose to 6% before being slashed back to 5% in 1994 — a cut that was followed by a “surge in tourism,” the Independent Budget Office later found. (The tax was raised again to 5.875% in 2013 and has stayed at that level since then, aside from a three-month pandemic pause on the tax in 2021.)
The Hotel Association launched its campaign with early support from two City Council members from the Bronx: Majority Leader Amanda Farias, who also chairs the economic development committee, and Kevin Riley, who heads the zoning subcommittee.
Farias, in a statement, said that “what the hotel industry is asking for is not a big lift.” Farias previously supported the industry’s 2022 campaign, which used the same name but focused on pandemic impacts.
The Hotel Association is an active political player: The group has donated $1,500 to Farias’s council campaigns since 2023. It also gave $2,100 to Adams’ re-election campaign, though the donations came before his indictment and subsequent scandals.
The mayor’s Tuesday comments that he was “looking at” lowering the tax, in response to a question by Crain’s, came a day after he made similar comments at HANYC’s annual gala in Manhattan. There, the business-friendly mayor made warm remarks that also functioned as a dig against the progressive candidates challenging him for re-election.
“We’ve got to feed into your industry to allow you to grow, and we need someone that’s business friendly, not someone that wants to attack and run businesses out of our city,” Adams told the hoteliers.
Dandapani, HANYC’s president, said the association was “encouraged by immediate support from members of the Council and the mayor’s positive comments.”
“We feel strongly that making this proposal part of the city budget would help address the headwinds faced by the tourism industry and set New York apart from other cities,” he said.
