New York City’s Safe Hotels Act is designed to address critical safety concerns for hotel workers and guests, but its sweeping regulations are raising concerns about the impact on the city’s hospitality sector. Introduced by Councilmember Julie Menin, the bill seeks to enhance safety protocols in hotels by requiring panic buttons for employees, direct employment for essential staff, and a mandatory hotel licensing system overseen by the Department of Consumer and Worker Protection (DCWP). While the intent of the legislation is to close gaps in worker and guest protection, the financial and operational costs it could impose on hotels have drawn sharp criticism.

Safety First: The Act’s Core Provisions

The Safe Hotels Act mandates that hotel staff, including housekeepers and front desk workers, must be directly employed by the hotel, eliminating the flexibility of outsourcing. This shift aims to increase accountability, as directly employed staff are seen as more integral to hotel operations and safety compliance. Additionally, panic buttons are to be provided for workers in isolated roles, particularly those at risk of harassment or violence while working alone in guest rooms or corridors. These safety measures come in response to high-profile incidents, such as the tragic 2021 murder at the Umbrella Hotel in Queens, and are intended to make hotels safer environments for both workers and guests.

Furthermore, the bill seeks to combat human trafficking by prohibiting hourly-rate hotels, a known avenue for illicit activity. By tightening control over hotel operations, the bill’s supporters argue that the industry can reduce the risks of crime and misconduct.

Economic and Operational Concerns

Despite the good intentions behind the legislation, the hotel industry has expressed deep concerns about the financial burden these new regulations could impose. Small, independently owned hotels, which often rely on outsourced labor to manage costs, could face operational challenges under the requirement to hire full-time staff. This loss of flexibility could lead to job cuts or reduced services, as operators struggle to balance safety regulations with shrinking profit margins.

For larger hotels, the cost of compliance—particularly the requirement to upgrade security systems and employ full-time workers—could still be significant. But for smaller properties, the potential closure due to non-compliance or excessive costs is an even more immediate threat. The hospitality sector, already weakened by the economic fallout from COVID-19, could find itself facing new hurdles just as it begins to recover.

The hotel industry is also wary of the licensing requirement, which places hotels under the regulatory purview of the DCWP. This new oversight adds another layer of compliance in an already heavily regulated industry. Critics argue that the potential for subjective decisions—such as whether a hotel’s noise levels are acceptable or whether security measures are adequate—could create instability. Licensing decisions could theoretically be influenced by third-party pressures, creating a precarious situation for hotel operators who may lose their licenses over disputes that have little to do with actual safety.

Could the Act Make NYC “Uninvestable”?

Industry experts warn that the Safe Hotels Act could make New York City an unattractive market for future hotel investment. Investors may be reluctant to finance projects in a city where hotels are subject to increasingly stringent regulations that could disrupt operations or lead to closures. The prohibition of hourly-rate hotels, though aimed at curbing human trafficking, may also affect budget hotels that cater to low-income residents and travelers, inadvertently pushing vulnerable populations further into the margins.

For an industry that contributed over $74 billion to New York City’s economy in 2023 alone, the consequences of stifling growth and investment could be profound. If smaller hotels are forced to shut down or if future developments are discouraged, the long-term health of the hospitality sector could be at risk. This is especially concerning as New York City’s tourism industry continues to recover from the financial devastation of the pandemic.

Finding a Balanced Solution

There is no question that hotel safety needs to be improved, and the Safe Hotels Act is an attempt to address valid concerns. However, the implementation of such regulations must be balanced with the operational realities faced by hotels. A more flexible approach could allow hotels, particularly smaller ones, to adopt safety measures in ways that suit their financial capacities. The act could also consider phased implementation timelines to ease the financial burden and allow hotels time to adapt.

New York City’s hotel industry is diverse, and a one-size-fits-all approach may not be the most effective way to ensure safety. As the legislation moves forward, lawmakers must carefully consider its broader economic impact. The Safe Hotels Act, in its current form, risks undermining the very industry it seeks to regulate. If New York City is to remain a competitive, thriving destination for travelers, it must find a way to protect workers and guests without driving hotels out of business.

In the end, the safety of hotel workers and guests should not come at the cost of making New York City “uninvestable” for future development. A compromise must be reached—one that ensures safety while supporting the hospitality industry’s ongoing recovery and growth.

Related