In face of Trump tariffs, NYC hoteliers push for lower tax paid by tourists

The New York City hotel lobby is urging elected officials to slash the hotel occupancy tax rate by nearly half, as it contends with a loss of tourism the industry blames on international tariffs imposed by the Trump administration.

The hotel occupancy rate, now at 5.875%, would drop to 3%, under the proposal of the Hotel Association of New York City. The surcharge brought in $238 million in the most recent fiscal quarter, according to data from the city comptroller’s office. But the industry worries about economic headwinds in the face of President Donald Trump’s trade policies, tariffs included.

Vijay Dandapani, the president and CEO of the Hotel Association of New York City, said in the current economic climate, hotel owners are “afraid of what the future could look like.”

The campaign to reduce the hotel occupancy charge comes as reports indicate that travel from Canada, the biggest supplier of tourists to the United States, dipped by 12.5% in February and 18% in March after two years of steady growth. International flights into all three of the region’s airports has also dropped, according to Crain’s New York Business.

The administration, in fits and starts, has called for tariffs on foreign goods ranging from 10% in many cases to as high as 145% in the case of China, prompting a multi-front trade war. In Canada’s case, Trump's added threat of turning the northern neighbor into a 51st state has generated intense resentment among Canadians and pledges to boycott the U.S.

The hotel industry’s push began earlier this month with a “StayNYC” industry campaign that stressed the value of hospitality to the local economy and the problem of the “whopping” occupancy rate.

Kaushik Patel, a hotel owner who has three properties in Long Island City, including a La Quinta Inn and Suites, said business is down 50% from 2019 and has struggled to emerge from the pandemic. If the hotel occupancy rate were reduced, Patel said, that would present “a huge saving” for tourists.

“And tourists will look at it positively and will travel again, and we will have business from international travel,” Patel said.

The risks posed by tariffs to the city’s economy was highlighted by City Comptroller Brad Lander, who predicted in a report last week the likelihood of a “mild recession” in New York City, due to the impact of tariffs on Wall Street and local tourism, among other industries.

Elected officials are also pushing for industry relief.

Amanda Farías, a council member from the Bronx, said in a statement that “reducing the tax rate is a smart, proactive step that will help boost tourism” and increase hotel occupancy.

“Tariffs absolutely have the potential to impact tourism, from currency fluctuations to the rising costs of consumer goods and experiences,” Farías said.

She added that “we should be doing everything possible to put safeguards in place immediately.”

The StayNYC campaign, paid for by the Hotel Association of New York City, was launched on April 7 and says the industry is responsible for more than 50,000 “good-paying jobs.”

“For people of color and immigrants in New York, hotels are a path to the middle class and a source of good wages and benefits,” the campaign website states. It continues, “Unnecessary taxes on tourists make visitors more likely to choose other cities as their destination.”

Dandapani said the loss of international tourists, whom he estimated spend “four to five times as much” as domestic travelers, is compounded by fears that tariffs will significantly increase costs for hotels, including furnishings made abroad.

“ People have placed orders in countries that are currently now being tariffed,” he said. “So instead of looking at, let's say $1,000 for a sofa, you're suddenly looking at $2,000 ”