Hotel occupancy rates decreased in 2020 how Coronavirus-related restrictions and fears prevented people from booking trips. The damage was particularly severe in New York City, which was originally marked as the epicenter of the outbreak. Indeed, a number of prominent New York hotels closed their doors in the course of the pandemic, while those who were not struggling immensely. And now these hotels are asking for a break.
Cancellation of property tax penalties
Some New York hotels are late Property tax Invoices due to cash flow restrictions due to massive drop in sales. And now these hotels are demanding that the penalties associated with this delay be given.
A trading group that represents a number of well-known brands such as Hilton (NYSE: HLT), Sheraton and Marriott (NASDAQ: MAR), as well as a number of smaller boutique hotels, asks New York City Mayor Bill de Blasio to forego the 18% interest Hotels were hit with property taxes for being late. Your plea stems from the fact that peeling out this money is just an additional burden at a time when business is far from booming.
In fact, hotel room occupancy in New York was just 36% in December, up from 88% last year, according to the property’s data hub STR. During that time, room rates averaged $ 130 per night – a sharp drop from the $ 303 per night guests had paid a year earlier. Forcing hotels to pay tax fines could effectively sink some of them into the ground.
But while these hotels make a compelling case for a break, the problem is that New York City is lacking in tax revenue and needs all the money it can get. In fact, budget officials say the city will lose about $ 10.5 billion in revenue by June 2022 thanks to the pandemic, so it may not be able to pass these penalties so easily.
While it is difficult to determine exactly how much outstanding property tax New York hotels owe, it is estimated that nearly 60 properties lag behind that obligation, given a total of $ 23.5 million in taxes plus accrued interest of $ 2 million will be incurred.
And while hotels that are part of larger chains may have corporate capital to save them, boutique hotels don’t have nearly equal access to finance – so they particularly risk permanent closings without help. Around 47% of the city’s 700 hotels are smaller businesses with 150 or fewer rooms.
The bottom line of Millionacres
Forcing New York hotels to recover from their property tax penalties could do serious harm hotel REITs (Real Estate Investment Trusts) – and others REITs with high concentrations in surface properties. That’s a hit Investors I don’t want it now, but if hotels keep pushing back they may face some kind of redress – even if this is a compromise and not a full rescue on the property tax penalty.
