New York Mayor Zohran Mamdani is banning what he calls “junk fees” on hotel prices advertised in the city. That sounds nice, but the policy is designed to prevent travelers from actually knowing how much they’ll have to pay for lodging.
“You deserve to know how much a hotel costs up front,” the socialist mayor said when announcing the change last week. Yet the rule states that “taxes and fees imposed by a government” can be excluded. Those add up quickly in New York.
The combined state and local sales tax rate is 8.875 percent, well above the national average. The city’s Hotel Room Occupancy Tax rate is 5.875 percent, and the state adds another $1.50 per day charge. Hotels could comply with the new rule and still understate their actual price by roughly 15 percent.
Even if the new policy accomplished its stated goal of price transparency, that’s always going to be less important than the price itself. Mamdani has shown no appetite for what it would take to actually lower the average nightly rate in a hotel.
Popular lodging options such as Airbnb have all but vanished from the country’s most populous city. This reduces competition with hotels and constrains the number of rooms available, raising prices for consumers.
The government also makes it difficult to create new lodging. The number of new rooms under construction fell by 49 percent from 2020 to 2024, in part because of a 2021 city rule requiring a special permit to build hotels.
A 2024 city law restricts the ability of hotels to use vendors, thereby forcing them in many cases to hire unionized employees who are covered by citywide collective bargaining agreements, which raises costs while reducing flexibility and efficiency. Hotel worker unions lobbied for both the ban on short-term rentals and the restrictions on contractors.
As the business environment for hospitality has deteriorated, over 43,000 hotel rooms in the city have been taken off the market since the pandemic. About 16,000 of them were being used to temporarily house migrants, though that issue has largely subsided. Thousands of hotel rooms have been converted into residential units. That the notoriously brutal New York residential market, with its stifling rent controls, is considered more attractive by comparison is the strongest indictment of the regulations on hospitality providers.
At the same time, it’s extremely lucrative to be the owner of a large hotel that employs union labor in New York right now because the government has effectively outlawed much of their competition. For smaller hotels, including many that are minority-owned, complying with onerous rules can be too much to handle. The smaller hotels have to raise prices to stay afloat while the larger ones have greater pricing power.
The “junk fees” issue simply doesn’t rate as a top concern. The city’s Department of Consumer and Worker Protection says it received around 300 complaints last year about hidden charges, which is not a lot in a city that welcomed 64.7 million visitors. But the person who does love to complain about it is former Federal Trade Commission chair Lina Khan, who is now a Mamdani adviser.
The city’s rule is modeled on Khan’s work at the FTC during the Biden administration, with the additional requirement that deposits and credit card holds must be advertised as well, even though those are returned so long as a guest does not go full Keith Moon on his room.
This isn’t about price transparency or consumer protection. It’s about blame-shifting for the uniquely awful hotel environment that government has created in New York City. So long as the high prices and added fees come from the government, the “affordability” mayor isn’t concerned about them.
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