New York City hotel owners reportedly will have to pay more than US $500 million to employees displaced by Covid-19. That is the largest hotel-employee payout ever awarded in New York City, and while it may be a victory for thousands of unemployed hotel workers it could mean yet more disaster for the city’s tourism and hospitality sectors.

The Wall Street Journal reported that while “the final amount of severance pay depends on a few factors, it is likely to be the biggest on record for any hotel-union group in the country.”

After years of record tourism, New York City faces a bleak future. Both tourism and corporate travel have essentially collapsed, Broadway is dark and other attractions and restaurants are either closed or operating at a reduced capacity. Any expectation of pre-Covid numbers could be years away.

THE WSJ said, “New York City has more than 200 union-operated hotels. More than 75 property owners are on the hook for payments after the ruling by an arbitrator, agreed upon by the New York hotel owners’ trade association and the hotel union, say people familiar with the matter.”

The value of the hotel owners’ payouts was based on worker seniority and included seven months of health benefits, according to the arbitrator’s decision. Severance payouts would stop if an employee is rehired by the hotel.

Some hotel owners may choose to pay workers through installments, and at least one is challenging the arbitrator’s decision in court.