WTC Records Folder 0122 label, 2001

NYC 9/11 Public Portal Document

• HOTEL ASSOCIATION OF NEW YORK CITY, INC. --1!; 437 MADISON AVENUE, NEW Yoxx, NY 10022-7398 (212)754-6700 FAX(212)754-0243

October 9, 2001

Honorable Rudolph W. Giuliani Mayor City of New York City Hall New York, NY 10007

Dear Mayor Giuliani:

The purpose of this letter is to seek equitable "property tax relief' for New York City hotels, specifically as it relates to the property tax payment due in January, 2002.

The hotel industry faces severe economic hardship in the light of the September 11`s terrorist attack. In the first eight months of 2001, prior to September 11ih, hotel revenue had decreased 15%-20% when compared to the year 2000. This translates into a 35%-40% profit decline. Since September 11th, occupancy has dropped by 60% and room rates have declined by 40%. Property taxes are the single largest fixed cost incurred by a hotel, other than debt service. Given the occupancy and revenue decrease, the impact of this expense on hotel profits is disproportionately greater than normal and the resulting short term impact is severe. The industry believes this trend will continue for at least the next six months.

As it now stands, the hotel industry's anticipated cash flow will not permit many hotels to make the property tax payments due in January. What has happened is not the usual moderate up or down trend in hotel revenues, which is usually manageable financially from year to year. This is an unprecedented economic situation and has already had an adverse impact on our industry's ability to maintain what would be normal employment levels.

Prior to September 11th, the hotel industry, which was already experiencing layoffs, and reduced work weeks, employed 30,000 people. Since September 11th, the industry had to reduce overall staffing by approximately 5,000 employees. Additionally, the industry has had to introduce mandatory three or four day work weeks. In order to reduce the negative impact on union staff, the hotel association has created a $5,000,000 fund to maintain their medical benefits. We believe the employment situation will only get worse in the foreseeable future. Immediate property tax relief will help mitigate this adverse impact on our employees.

The property tax assessment system was never designed to anticipate such a catastrophic business drop- off. As we are all aware, operating results from calendar years 1999 and 2000 give rise to the current assessed values and the tax payments due in January. Subsequent moderate downturns, like those experienced prior to September 11th; are factored into future year payments using the ongoing assessment methods used in the normal course. But the present state of travel and tourism to New York City is not normal.

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