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Arbitrator Rules New York Hotel Owners Must Make Record Payout To Laid-Off Workers

A room at Embassy Suites by Hilton in Manhattan.

New York City hotels that have seen their occupancy and revenue plummet as a result of the pandemic will now have to pay hundreds of millions to their employees that have been pushed out of their jobs. 

An arbitrator ruled that the property owners at 200 hotels must pay in excess of $500M to union workers who have lost their jobs, The Wall Street Journal reports. Hotel owners and union representatives said the payout, which is not yet finalized, is the largest hotel-employee payout in the city. It is also on track to be the largest ever paid by a hotel union group in the United States.

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

The funds will take the form of severance payments and include seven months of health benefits. A total of 75 hotel owners, of the 200 union operations in the city, will be making the payments, which are based on worker seniority. Payments will stop if the employee is hired back by the hotel operator.

At least one hotel — the Renwick Hotel in Midtown Manhattan — is appealing the decision in a U.S. District Court in New York.

The New York City hospitality market has been brutalized by the pandemic; what were initially temporary furloughs have slowly become permanent throughout the year. Multiple operations have shut down for good as the pandemic has dragged on.

The Marriott-owned W Hotel in Lower Manhattan won’t open its doors again. The historic Roosevelt Hotel is closing too. Hilton announced in September it is closing its 478-room hotel in Times Square, while Ashford Hospitality Trust sold the Embassy Suites by Hilton in Midtown it owned for less than two years in order to meet demands from lenders back in August.

Challenges that are causing pain to hotels haven't abated, either — Broadway is closed until at least the summer and a new forecast predicts it could take until 2025 for tourism to return to its pre-pandemic levels.