'Talk About Leverage': NYC Hoteliers Pay Dearly To Dodge World Cup Strike

Faced with a choice between a potentially devastating work stoppage during a once-in-a-generation sporting event and agreeing to massive wage increases, New York City hotel owners opted for the latter.

The Hotel and Gaming Trades Council and the Hotel Association of New York struck a deal this week for a new bargaining agreement, clearing the way for unionized hotel workers to earn more than $100K a year.

The deal ensures that hotels will operate without disruption during the World Cup and America 250 celebrations, but it also means the country's most expensive hotel market by far isn't getting more affordable for travelers anytime soon.

“At the end of the day, this is going to put upward pressure on room rates,” said Daniel Lesser, CEO of LW Hospitality Advisors. “I don't see any other way you can solve for this challenge.”

Wages for housekeepers and other workers at roughly 250 hotels will increase incrementally over the next eight years by roughly 52% overall, reaching $60 an hour by 2034 — the largest increase in the union's history. Hotel operators will also continue to pay the full costs of healthcare for members and their families.

The deal is expected to be ratified following a vote from the union’s 27,000 members Thursday. It is the most generous hotel labor agreement in the country, industry players told Bisnow.

The agreement amounts to a cost increase of roughly 15% for owners, Hotel Association of New York President and CEO Vijay Dandapani said. 

The previous contract was set to expire June 30, four days before the 250th anniversary of the Declaration of Independence and less than three weeks before the FIFA World Cup Final.

While New York hotels have the highest occupancy levels of any U.S. market, owners have been struggling to keep up with rising expenses. 

Hanging over the negotiations was a bill under consideration in the New York City Council, similar to one passed in Los Angeles last year, that caps the square footage that hotel housekeepers can clean every day.

New York’s version of the legislation would have added almost 40% in expenses, Dandapani said. It was withdrawn last week as conversations between the union, which has deep influence in City Hall and Albany, and hotel owners progressed. 

“That would have really upended the marketplace,” Dandapani said. “We were negotiating with that threat over our head.”

A string of recent union-led strikes served as a warning to hoteliers that a labor walkout was a serious threat, Dandapani said.

In late 2024, it took owners and Boston’s hotel union almost two months to come to an agreement after a strike at several hotels, resulting in wage increases of almost $10 an hour and improved benefits. LA’s hotel union carried out a strike in 2023 that led to an agreement now seen as unpalatable to hotel investors, industry leaders have said.

This week, a three-day Long Island Rail Road strike ended with a wage increase after three days of commuters facing delays of up to three hours. In January, 15,000 nurses at three city hospital systems started a strike that lasted six weeks over pay, staffing levels and layoff protections. They were joined by Mayor Zohran Mamdani on the picket line.

The city's real estate industry has been careful to avoid a similar fate.

Apartment landlords last month dodged a strike by 32BJ SEIU, which represents 34,000 doormen, at the eleventh hour by agreeing to pay an additional $4.50 an hour — an approximately 13% increase over four years — to union workers, plus enhanced benefits. 

Labor is the largest expense for hoteliers, accounting for as much as 55% of the business’s overall cost structure, said Chris Darling, a senior analyst and head of U.S. lodging and gaming research at Green Street. The new contract only increases risk for any hoteliers already struggling with mounting expenses.

“This is a significant cost burden,” he said. “It's a big, right-in-your-face number, but obviously spread out over eight years.”

Despite the wage escalations, a new contract means investors and potential buyers have more predictability and a better way of underwriting deals, Lesser said.

But that certainty doesn’t negate the sector’s ongoing financial difficulties. Hotel operating costs across the U.S. are rising four times faster than revenues, according to data from the American Hotel and Lodging Association. Insurance has increased by 111% since 2019, while utilities are up 28% and property operations are 23% costlier.

In NYC, owners also face occupancy taxes of almost 6% and an 18% interest rate on property taxes, according to HANYC. As of last year, they must also pay a $350 licensing fee every two years.

“Lots of other expenses are going up faster than revenues. That's an untenable situation,” Lesser said. “How long can you go where revenues are increasing less than expenses?”

Hotel owners have been raising their rates to compensate. The average daily rate for NYC hotels last year was $334, up 5% from 2024, according to the city’s tourism body, NYC Tourism + Conventions. ADR rose nearly 6% between 2023 and 2024, according to CoStar data.

So far in 2026, ADR is up 2.3%, but revenue per available room hasn't kept pace, up 1.8%. 

Union rules mean hotels can’t cut staffing levels unless hotels cease offering existing services, like the 2,000-key New York Hilton Midtown did with its room service in 2013.

“The only way you can make up for it is by pushing your revenues,” Lesser said.

But the ability to raise rates depends on demand.

Around 65 million tourists came to NYC last year, below the 66.6 million who visited in 2019, according to NYC Tourism + Conventions. The number of tourists coming from abroad fell by 3.2%, with domestic travel's 1.7% increase only making up for some of that loss.

“Operators would love to pass through some of these costs as best they can,” Darling said. “But ultimately, that's a consumer-driven outcome.”

New York’s role as one of the U.S. host cities for the upcoming FIFA World Cup added to pressure to get a deal done well ahead of the current contract’s expiration, Dandapani and Lesser said.

The World Cup is unlikely to add to demand for rooms in the way that hotel operators had hoped: Bookings in 11 U.S. host cities were below initial forecasts for 80% of respondents surveyed this spring by the AHLA. New York City hotels have filled only 25% to 30% of their rooms during the tournament, below last year's summer pace, according to CoStar data reported by Commercial Observer.

There are five games scheduled across the Hudson River at MetLife Stadium, with two games — including the World Cup final — taking place after the contract expired. Even if bookings don't meet prior expectations, a work stoppage during that period wasn't something hotel owners were willing to risk.

“It was highly publicized that they wouldn't think twice about going on strike during FIFA,” Lesser said. “Talk about leverage.”