Have cities like New York, Los Angeles and San Francisco declared war on hotels?

What does the expression “kill the goose that lays the golden egg” mean? “Destroy something that makes you a lot of money” is the Cambridge Dictionary’s succinct definition.

Hotels are an integral part of a city’s economy. They house tourists and business visitors to a city and provide valuable tax revenue to local coffers. They provide a venue for social events like weddings and business functions like meetings and conventions. Hotels also offer jobs, including many entry-level positions.

Many hotels have barely survived COVID. But rather than promoting the recovery of the hotel sector, many American cities, such as New York, Portland, San Francisco and Los Angeles, are not exactly promoting their hotels to potential visitors. Instead, cities are using hotels to house migrants, homeless people and drug addicts. Meanwhile, rising street crime threatens tourism in travel meccas like San Francisco.

In Los Angeles, an initiative was presented to the city council in July that called on city hotels to report vacancies to the city’s housing authority daily. Then, under the Los Angeles Responsible Hotel Ordinance, homeless people could receive a voucher (funding source not yet defined) that would pay the hotel a “fair market rate” for the room. The unhoused individual could then settle in the hotel for the night, next to the paying customers, without control.

As the order states, “new and existing hotels will be required to adhere to responsible business practices, including providing guest rooms to non-hosted Angelenos on a non-discriminatory basis, and will be subject to city ​​watch”.

The petition was circulated by the local union of hotel workers and garnered 126,000 signatures. Their stated concern was that “the new hotels do not contribute to the city’s lack of affordable housing, burden the city’s social services, or cause undue impacts on transportation and traffic.”

Of course, hotels were never designed to solve the problem of permanent accommodation. They were intended for short-term accommodation (except for the occasional eccentric who insisted on living in hotels and paying accordingly.) At the city council meeting where the Responsible Hotels Ordinance was proposed, Stuart Waldman, president of the Valley Industry and Commerce Association, said, “Hotels didn’t cause the homelessness problem. Hotels are not the solution to homelessness.

The crowd, including dozens of hoteliers, roared in approval. But rather than reject the measure out of hand, the city council kicked down the street. Instead, he voted 12-0 to put the measure on a citywide ballot in March 2024.

If the hotel situation in Los Angeles is bad, it is even worse elsewhere. In San Francisco, as a recent SF Chronicle story revealed, “at least 166 people fatally overdosed in city-funded hotels in 2020 and 2021 – 14% of all confirmed overdose deaths in San Francisco. , although the buildings housed less than 1% of the city’s population.

In New York City, the city government is also doing a disservice to the tourism industry. In New York, the city government now leases at least eleven hotels. More than 4,000 migrants, many of whom were shipped across the country by bus from Texas, have entered the city’s shelter system since May. What were called “social hotels” in the 1980s are today accommodation for “homeless” or “migrants”.

Such decisions are not free for tourism infrastructure. In addition to financial outflows from renting hotel rooms to people who cannot pay, cities lose tax inflows from tourists and business travelers who pay hotel accommodation taxes.

Uncontrolled crime and hotels full of homeless people do not necessarily attract tourists to the surrounding neighborhood. The hotels themselves are suffering from increased wear and tear. In Los Angeles, a hotel owner, who had rented his hotel to the city for housing under a pandemic-era initiative called Project Roomkey, said he had spent a considerable amount of time clean up damage caused by new tenants.

The situation, if any, is worse in Portland, Oregon. Operators of the historic Benson hotel in downtown Portland are reportedly considering legal action against the city after a corporate client abandoned their stay at the hotel over “security concerns”. A hospitality official reportedly told the Oregon Restaurant and Lodging Association, “The city is failing in its duty to provide basic services (cleanliness, safety and security).”

In Seattle, 11 homicides in August marked the highest number since at least 2008. A recently opened Amazon Go marketplace on Pike Street was closed “for the safety of our store employees, customers and third-party vendors.” The nearby popular Wild Ginger restaurant had 5 shuttered and smashed windows, including one smashed by a rock thrower with customers inside.

Crime has increased in Portland, as has the growth of homeless encampments. There was a 144% increase in homicides from January 2019 to June 2021, while non-fatal shootings increased by 241% from January 2019 to December 2021.

Rising violent crime is not good for anyone, and it certainly has an impact on travel and tourism. The Benson, a historic hotel in downtown Portland, was reportedly beaten in terms of bookings. An unnamed corporate client has apparently terminated a contract for 300 rooms per month at $156 a night, citing security concerns. Delta and Alaska reportedly reduced their commitment to purchase rooms at the Benson for the same reason.

The hotel executive was considering suing the city of Portland over the Benson. “I have to believe that we can get other hoteliers on board and make it a class action lawsuit. We’re not the only ones suffering.”

The loss of tourism dollars is not the worst effect of rising crime and growing homelessness. And city officials facing crises like housing thousands of homeless people understandably see the hospitality industry as a short-term stopgap solution. But it could well be the canary in the coal mine, showing that city officials are ignoring the slow death of the golden goose for every city, its hotel and tourism industry.

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