The 529-room Kimpton Era Midtown New York recently opened in the heart of Manhattan, steps from Rockefeller Center. A luxury property with multiple restaurants featuring celebrity chefs, the Kimpton hotel enters what appears to be a thriving market with year-round occupancies surpassing 80%.
And the fact that the Kimpton Era Midtown New York opened at all marks it as an increasing rarity for the most high-profile hotel market in the U.S.
Legislation in recent years has made it challenging to both open and operate a hotel in the Big Apple. The Kimpton Era debuts at a time when existing hotels are highly desirable as investment assets.
Luxury properties like the Kimpton Era may be the only kind of sizable hotel that might open in New York City in the near future.
“Given the extraordinarily high costs of developing a hotel in New York City, due to land and permitting costs as well as the highest real estate taxes and wage and benefit rates in the U.S., large luxury hotels are the only ones that could come close to being profitable on a stabilized basis,” said Vijay Dandapani, CEO of the Hotel Association of New York.
The first of two primary pieces of legislation that have redrawn the hospitality landscape for the city was the 2021 special permit legislation that requires a lengthy and complicated process to develop a hotel. As a result, new hotel construction dropped to near-zero after 2021 and only a handful of projects have even attempted the process.
That was followed by the 2024 Safe Hotels Act, which called for mandatory licensing, staffing mandates, direct-employment requirements for 100-plus room hotels, restrictions on subcontracting and new compliance obligations. The result: higher labor costs, less flexibility in operating models, more regulatory risk and more friction for ownership changes or management transitions.
“All business is founded and developed on the premise of continuity and reasonable certainty,” Dandapani said. “Unfortunately, New York City is a highly regulated if not over-regulated jurisdiction, particularly for hotels, with the cost of business continually changing and compliance costs increasing.”
Daniel Lesser, CEO of LW Hospitality Advisors, said the rationale behind these two pieces of legislation was to ensure union labor is involved in both developmental and operational aspects of hotels. Even existing owners who didn’t necessarily have to deal with union-related issues in the past may have to do so as a result of the legislation.
Before the 2021 legislation was even passed, an article in The New York Times foresaw the challenges. The Hotel Trades Council has long pushed to limit the construction of new hotels, which are often nonunion. Its calculation has been that limiting the development of such hotels, which typically offer less expensive lodging than existing full-service hotels, would tend to increase hotel room prices generally and bolster the higher-end hotels where many of its workers are employed.
And just recently, the American Hotel & Lodging Association submitted testimony to the New York City Council warning that provisions in the city’s proposed fiscal year 2027 budget could increase costs for hotels and threaten jobs.
AHLA’s testimony addressed proposed changes to the corporate tax structure and the pass-through entity tax, stating that these changes could increase costs for hotel owners, including small business operators structured as partnerships or S corporations, as well as other small businesses supporting hotels. The association also cited a proposed 9.5% increase in the city’s real property tax, noting this could further strain hotel finances as operating costs continue to rise.
Over the past five years, according to AHLA’s testimony, hotel operating costs in New York have increased roughly four times as fast as revenue growth.
Union officials argue that many of the new hotels that have sprung up outside Manhattan in recent years have turned into homeless shelters or have become plagued by crime. They contend that the special permit would not stop development but would ensure that it incorporates community concerns.
Despite the potential drawbacks, investors see existing New York hotels as prime investment opportunities. According to the JLL 2026 International Hotel Investment Outlook, New York was the most liquid hotel market in the U.S. in 2025. With historically low new supply because of the changes in the city’s zoning regulations and increased liquidity dynamics, according to JLL, this will create opportunities for owners looking to monetize their investments. Risks remain however, including union contract renegotiations, potentially slower international visitation and the impact of policy shifts made by the new mayoral administration.
Kevin Davis, Americas CEO for JLL Hotels & Hospitality, said that in 2025 New York saw over $3.7 billion in transactions. There were legacy projects prior to 2021 that will get delivered. Beyond the next 12 to 24 months, there won’t be significant additional hotel supply in New York, he said.
The 2024 Safe Hotels Act effectively made it difficult for non-union hotels to contract with third-party labor in operating hotels, Davis said. There is concern that this legislation would compel non-union hotels to emulate unionized hotels in some ways. Since those regulations took hold, there has been a robust sales market in the city.
As a result of these laws and others, investors can buy hotels in New York at half of what it costs to build them, Davis said.
“Why build when you can buy at 50 cents on the dollar?” he asked. “When you layer in the 24- to 36-month permit process, you are talking about roughly six years from the time you decide you want to build a hotel until it opens with no cash flow.”
Davis agrees that luxury hotels are the most economically viable option with the city “relatively undersupplied” in that segment.
And the recently enacted laws on “junk fees” are another issue to consider. This legislation is a 2026 consumer-protection rule that bans hidden mandatory hotel fees and undisclosed credit-card holds. It is one of the strongest local crackdowns on hotel pricing transparency in the U.S.
The rules make it a deceptive trade practice for any hotel or booking platform to advertise a room rate without clearly showing the full price, including all mandatory fees.
This covers:
- Resort fees, destination fees, hospitality fees or any other mandatory charge not included in the advertised price.
- Mandatory credit-card holds or deposits that aren’t disclosed upfront, including the amount and when the hold will be released.
- Hotels must now present one total price at the moment of advertising or booking — no more adding fees at checkout.
The supply-demand imbalance for the future, as well as strong operating performance, will continue to make New York a top investment market globally, Davis said. The city will also gain disproportionate benefits from the FIFA World Cup with the final match just a few miles away in New Jersey. Lesser said the market is poised to benefit even more from the large numbers of hotel rooms that have been removed from the inventory. For instance, The Roosevelt Hotel, with almost 1,000 rooms, may never return as a hotel because it is physically and functionally obsolete. Other properties are in a similar position.
On the other hand, Row NYC, a 1,300-room hotel in the Times Square area that had been shuttered for several years, will reopen on May 1 after an extensive renovation. During the period of the city’s migrant crisis, the property had been one of the larger migrant shelters.
While he is unaware of any hotel projects that have been shelved because of the legislation, Dandapani said since the introduction of the Citywide Special Permit only one hotel has been able to run the gauntlet of rules and processes and successfully secured a permit: the Hard Rock Hotel, part of the Metropolitan Park Casino development at Willets Point, near Citi Field, home of the New York Mets.
Looking ahead, Davis said with union negotiations slated to be wrapped up this summer, investors may be taking a wait-and-see approach. Once there is clarity on the collective bargaining agreement, there should be a substantial uptick in investment, he said.
JLL is “incredibly bullish” on New York, Davis said. It’s been a long time since there has been this level of excitement on activity in the city.
“New York is on steroids,” he said, “and no new supply makes investments even more desirable.”