NYC hotel owners to pay more than $500 million to employees displaced by COVID-19: report

New York City hotel owners will have to pay more than $500 million to employees displaced by the coronavirus pandemic following a recent arbitration ruling, The Wall Street Journal reported on Wednesday.

Sources familiar with the ruling tell the newspaper that the severance amount is likely the largest ever hotel union group payout in the country, a boon for employees but another hit for owners in an unprecedentedly difficult year for the hotel industry.

Travel of all kinds has come to a near standstill as tourists and business travelers seek to avoid COVID-19 risks.

“Continuing health care in the context of a pandemic is a critical thing. These severance payments are a necessity for our hotel workers after the federal supplements ended last summer,” said Rich Maroko, president of the Hotel Trades Council union.

There are more than 200 union-operated hotels in New York, the Journal reports, and more than 75 property owners will be responsible for the half-billion dollar payment.

Some owners have already made their payments to the Hotel Trades Council, according to the Journal, while others plan on paying through installments. At least one owner is challenging the ruling in court.

The newspaper reports that hotel owners say they will have to shut down operations throughout the city. Even if they reopen, businesses may not recover from this extreme setback for many years to come.

Many of the city’s largest hotels, including the Hilton Times Square and the Roosevelt Hotel have announced that they will be shutting down permanently. According to hotel owners, nearly 25,000 rooms, 20 percent of those in New York, may never reopen.

According to government data, New York City is currently experiencing a slight rise in COVID-19 cases, though nowhere near the numbers seen in the spring and summer.