The New York SAFE Hotels Act Faces First Legal Challenge
KEY TAKE
The pending Article 78 proceeding has the potential to force legislative or administrative restructuring of how New York City regulates hotel operations and employee protections.
In our January 2025 issue of Leisure Law Insider, we provided a summary of the final version of what is now New York City Local Law § 20-565 (the SAFE Hotels Act or Act). The Act took effect on May 3, 2025, and was enacted to strengthen safety standards and accountability in New York’s hospitality sector. Now, the Act is being challenged by a coalition of hotel owners and trade associations called Hotel Owners of New York, Inc. (HONY), established in July 2024 to address the potential impacts of the (then pending) legislation.
Critics also argued that by requiring all hotels in New York City with 100 rooms or more to directly employ all front desk and housekeeping employees, the Act would not only burden those hotels with added costs and reduce market values, but also make it easier for the Hotel and Gaming Trades Council, the New York City hotel workers’ union, to organize non-union hotels.
The Act puts forth a new licensing scheme for the city’s hotels and includes new and stronger standards regarding safety, staffing, and cleaning of hotels.
Since the Safe Hotels Act took effect in May 2025, its impact on the hospitality industry has been swift in some areas, with many operators already facing increased operational costs in order to comply with the Act, increased liability with respect to underwriting and renewing loans, and an increased interest in unionizing workspaces (as hotels with collective bargaining agreements meeting certain requirements receive partial regulatory relief under the Act).
While the Act came into effect less than six months ago, it already faces scrutiny through a pending Article 78 proceeding, Hotel Owners of New York, Inc. v. New York City Department of Consumer and Worker Protection et al., Index No. 161832/2025, that challenges portions of its enforcement framework. An Article 78 proceeding is a New York State legal procedure used to challenge the actions (or inactions) of a state or local government agency or official. It is a way to seek judicial review of a final administrative decision.
In the petition, filed on September 3, 2025, HONY argues that the New York City Department of Consumer and Worker Protection (the DCWP), the agency that oversees and enforces the Act, has promulgated rules that are arbitrary and capricious, unconstitutionally vague, and outside the scope of their putative authorizing statute. In essence, HONY contends that the rules enacted by the DCWP in its role as both regulator and enforcer of worker safety mandates violate principles of administrative law and due process. HONY claims “DCWP’s imposition of improper requirements are impermissibly punitive and impose undue burden on hotel owners and operators, the backbone of New York City’s tourism industry.”
HONY alleges that the DCWP’s final rules, which are supposed to enforce the Act, exceed the DCWP’s statutory authority and are inconsistent with the terms of the Act in several ways. HONY claims some of the mandates imposed by the state agencies implementing the Act, particularly those regarding broad records retention requirements and monetary penalties, are vague, place an undue burden on hotel operators, and are unsupported by a rational basis.
Specifically, HONY alleges that nothing in the Act permits the DCWP to (i) promulgate rules related to records retention; (2) impose an adverse inference on an applicant for allegedly failing to maintain such records; and (3) promulgate rules under the Act to enforce other laws such as through the imposition of monetary penalties for alleged violations of New York City’s 2020 Hotel Services Disruption law. HONY also claims that while the DCWP requires documents and information to be furnished by hotels, that rule lacks clarity, fails to provide fair notice of the conduct it regulates, fails to provide clear standards, and invites arbitrary and discriminatory enforcement. HONY further alleges that the DCWP’s license application is inconsistent with the Act because, despite the Act’s provision that a collective bargaining agreement will satisfy the requirements for applicants to provide information to ensure compliance, DCWP has been requiring applicants with collective bargaining agreements to still provide reporting information.
HONY seeks (i) a judgment vacating the DCWP regulations at issue as arbitrary and capricious; and (ii) a declaratory judgment that the regulations at issue are invalid and therefore unenforceable. DCWP has not yet filed a response to the petition. As of now, the outcome of this case remains pending before the New York Supreme Court, New York County.
A ruling in HONY’s favor could mean that the licensing and compliance certification system administered by the DCWP may be suspended and existing fines or penalties issued under the Act might be vacated or require review. This could result in the DCWP’s enforcement role being curtailed pending new legislation or amendments clarifying its authority.
As more updates develop, Leisure Law Insider will cover the advancements.
What All Hospitality Employers Need to Understand About Labor Law
KEY TAKE
All hospitality industry employers, including those without union represented employees, are subject to the National Labor Relations Act and are well advised to monitor the National Labor Relations Board's actions and decisions.
Hospitality employers cannot ignore labor law just because their employees are not represented by a union. All hospitality employers must fully comply with labor law developments because their employees are protected by the National Labor Relations Act (Act), even in the absence of union representation. As a result, hospitality employers must monitor decisions issued by the National Labor Relations Board (NLRB), which is the federal agency that interprets the Act.
NLRB developments through the years generally swing back and forth, depending on whether there is a Democrat or a Republican in the White House. This swinging pendulum creates a lack of precedent and stability for employers to rely on. Employers anticipating more favorable decisions with the change in the White House will have to wait because the NLRB cannot issue any decisions until it has a quorum.
Two’s Company, but Three Is a Quorum
The Act, created 90 years ago as part of New Deal legislation, established a five-member NLRB to be appointed by the president, with the advice and consent of the Senate. The practical effect is that a Republican president appoints the majority members who are basically pro-employer, and a Democratic president appoints the majority members who are basically pro-union and pro-employee. The Supreme Court decision in New Process Steel v. NLRB, 68 U.S. 674 (2010), held that a two-member NLRB does not constitute a quorum, and therefore cannot issue decisions.
The NLRB currently has only one member, as the result of the recent expiration of Member Marvin Kaplan’s term, and President Donald Trump’s previous removal of Member Gwynne Wilcox. No president has ever removed a sitting NLRB member, who are typically allowed to serve the remainder of their appointed term. On July 17, 2025, President Trump nominated two basically pro-employer members: James Murphy’s nomination is pending Senate confirmation, and Scott Mayer’s nomination remains pending in a Senate Committee.
Until either both NLRB nominees are approved by the Senate, or, if only one is confirmed, the Supreme Court decides whether the president had the authority to remove Member Wilcox, the NLRB will not be able to issue any decision. That Supreme Court decision may have been foreshadowed recently when the Fifth Circuit, in response to challenges brought by SpaceX, Aunt Bertha, and Energy Transfer, issued a preliminary injunction finding that the “for-cause” removal protections for NLRB members is likely an unconstitutional restriction of the president’s authority.
NLRB General Counsel’s Actions
Non-union private sector employers can take some comfort in the actions of Acting General Counsel William Cowen, who reversed many of the General Counsel Memoranda issued by his predecessor, Jennifer Abruzzo. Trump’s nominee for General Counsel, Crystal Carey, is pending Senate confirmation. Although not of the same legal impact as NLRB decisions, General Counsel Memoranda outline enforcement priorities under the Act. Among the important changes recently authorized by the Acting General Counsel are: (1) narrowing the interpretation of employee rights and protections under the Act, resulting in employers having more leeway to discipline non-union employees who engaged in disruptive or disrespectful behavior; (2) eliminating NLRB enforcement actions that sought to limit electronic monitoring of employees and restrictive covenants in employment agreements; (3) reducing limitations on mandatory employee meetings during union election campaigns; (4) limiting the remedies available to unions and employees under the Act; and (5) clarifying the possible conflicts between speech and conduct protected under the Act but prohibited by various federal anti-discrimination laws.
NLRB Wish List
When the NLRB achieves a quorum and can resume issuing decisions, employers would like several prior NLRB decisions to be reversed or at least limited in order to clarify the Act’s application, especially to non-union employees. Included among those decisions are: (1) Stericycle, Inc., 372 NLRB No. 113 (2023), which held that facially neutral employment rules or policies (social media, negative conduct by employees, and maintaining confidentiality) are presumptively invalid if a reasonable employee could interpret them as interfering with employees’ rights; (2) McLaren Macomb, 372 NLRB No. 58 (2023), which held that broadly worded confidentiality and non-disparagement clauses in separation agreements were violations of employees’ rights; (3) Home Depot USA, Inc., 373 NLRB No. 25 (2024), which held that employees may display political messages on their work uniforms; and (4) Lion Elastomers, LLC II, 372 NLRB No, 25 (2024), which limited an employer’s ability to discipline employees for verbally abusive conduct related to working conditions, even if that conduct potentially violates anti-discrimination law.
Will States Work to Fill the NLRB Void?
Another development caused by the NLRB’s lack of a quorum is the possibility that states will enact laws to fill the void left. Most states have enacted labor laws regulating public employment issues; however, previous state attempts to regulate private employment have been found to be preempted by the Act. Although it is likely that current state attempts to enact private employment laws would meet the same fate, we cannot readily dismiss the notion that states are capable of affecting private sector labor relations. One state, New York, has already amended their State Labor Relations Act to grant the New York Public Employment Relations Board authority to oversee private sector union elections and to investigate and resolve unfair labor practices filed against private sector companies. The NLRB promptly filed a lawsuit contesting the amendment as preempted by the Act. On this note, it will be interesting to monitor the results of an issue that is currently percolating through the courts: whether a state can require a private sector employer to enter into a Labor Peace Agreement with a union as a precondition to granting a state-issued license, or receiving state economic assistance.
Conclusion
Non-union private sector employers must monitor NLRB developments and be prepared for a flurry of activity once the NLRB achieves a quorum, possibly in the near future.
Regulating Protected Class Data and Algorithmically Derived Data: New York's Algorithmic Pricing Act Takes Effect
KEY TAKE
The Act emphasizes consumer transparency by requiring disclosures that are factual and non-misleading, aiming to prevent discriminatory pricing practices.
Hotels should now be in compliance with the newly enacted New York Algorithmic Pricing Act (the “Act”).[1] Following the legislative trend toward transparency and customer protection in pricing practices, the new law impacts businesses, including hotels, that utilize customer specific data to set personalized prices (a practice commonly referred to as “surveillance pricing”). Hotels often employ sophisticated revenue management software that rely on algorithms to optimize pricing in real time.
To inform customers that their price was determined algorithmically using their personal data, the Act mandates the disclosure of “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA” in a clear and conspicuous manner. For example, if a hotel’s website adjusts the room rate based on a customer’s browsing history or loyalty status, and this adjustment is made using an algorithm, the disclosure requirement would be triggered.
The Act also prohibits the use of “protected class data”[2] (such as age, ethnicity or gender) in a way that results in discriminatory pricing. Protected class data cannot be used if (i) the use of that data has the effect of withholding or denying any of the accommodations, advantages, and privileges accorded to others or (ii) the price is different from the price offered to other individuals or groups based in whole or in part on the use of protected class data. This is intended to target AI-driven pricing systems.
Until recently, the Act’s enforcement was paused due to a legal challenge, and the New York Attorney General had agreed not to enforce or investigate violations until the litigation was resolved. On October 8, 2025, Judge Rakoff in the United States District Court for the Southern District of New York dismissed the lawsuit challenging the Act. Judge Rakoff rejected claims that the statute violated the First Amendment because it compelled speech. He held that the required disclosure is factual, “uncontroversial,” and reasonably related to the State’s interest in consumer transparency. The court held that the required disclosure is factually accurate and not misleading, and it was not relevant that a regulated entity would prefer not to make the disclosure or make a different statement on the same topic. Unless there is a stay pending appeal, which has not been entered as of the date of this publication, the Act took effect immediately.
[1] N.Y. Gen. Bus. Law § 349-A.
[2] “Protected class data” means information about an individual person or groups of people that directly, in combination, or by implication identifies a characteristic that is legally protected from discrimination under the laws of the State of New York or federal laws, including, but not limited to, ethnicity, national origin, age, disability, sex, sexual orientation, gender identity and expression, pregnancy outcomes and reproductive health care.
Latin American Tourism at an Inflection Point: The Rise of Third-Party Hotel Management
Rogerio Basso is a Principal with Impactum Capital Advisors. Impactum is a boutique investment bank platform specializing in capital markets in the hospitality and tourism sector in Latin America and the Caribbean. The firm sources capital (debt/equity) for sustainable tourism projects at different stages of development, while also providing strategic guidance to promote impact investing principles rooted in ESG.
Latin America’s hotel industry stands at a turning point, as third-party management companies usher in a new era of professionalization and scale. Their rise is transforming operations, attracting institutional capital, and reshaping the region’s tourism landscape—paving the way for sustained, long-term investment.
A Sector in Transition
Latin America’s tourism industry has long been defined by its vibrant cultures, diverse landscapes, and entrepreneurial spirit. Yet when it comes to lodging, the region remains highly fragmented: nearly 70% of hotel supply is still comprised of independent properties. Compared to more mature markets such as the United States—where branded and professionally managed hotels dominate—the presence of large brands and specialized third-party managers in Latin America has historically been limited.
This is now changing. Global hotel brands like Marriott, Hilton, and Hyatt continue to accelerate their asset-light strategies, focusing more on franchising than direct management or ownership. This shift opens the door for third-party management companies to step in and operate properties on behalf of owners. While Brazil’s Atlântica Hospitality has long been a one-country champion, featuring investment from financier George Soros and Tao since 2014, the broader region has lacked regional platforms of scale. Today, however, momentum is building rapidly, and Latin America is at an inflection point: third-party hotel management is set to expand significantly, bringing higher standards, operational sophistication, and a wave of new opportunities.
Local Champions Step onto the Regional Stage
Over the past decade, several Latin American operators have grown steadily, setting the stage for a new era. These companies are not only raising operational standards but also building institutional capabilities around revenue management, procurement, training, and distribution.
For example, Bogotá-based GHL Hoteles has extended its reach into Peru, Chile, and Central America, with a pan-regional platform of over 65 hotels. Metro Hotels, also Colombian, has broadened its footprint outside its home base, while OxoHotel has publicly announced ambitions to expand beyond Colombia. Smaller boutique platforms such as Sixstar in Ecuador and Cayuga Hospitality in Costa Rica are professionalizing operations and creating new benchmarks for service delivery.
What we are witnessing is a shift from country-centric operations toward regional expansion, building expertise that mirrors more developed markets. Their growth illustrates the first wave of homegrown operators expanding their borders and professionalizing the sector.
U.S. Operators Enter the Market
A second phase of evolution is now unfolding: the entry of U.S.-based third-party management companies into Latin America. These firms are aggressively positioning themselves to capture first-mover advantages and secure long-term growth.
Highgate, a significant hotel operator in the United States, announced a major entry into Peru in 2022 through its management of the Breca Group’s Urbanova portfolio. Aimbridge Hospitality, Hotel Equities, and Remington Hospitality have recently established dedicated resources and leadership teams focused exclusively on Latin America and the Caribbean. Aimbridge, for example, launched a Miami-based all-inclusive division to cater specifically to resort-heavy markets like Mexico and the Caribbean.
These moves represent more than opportunistic plays; they signal long-term strategic intent. By establishing local teams and making region-specific investments, these firms are betting on Latin America as a structural growth market. Their arrival also intensifies competition and raises the operational bar for local players.
Consolidation and Cross-Border Investments
The third—and perhaps most transformative—phase is the growing interest of global investors in acquiring or partnering with Latin American operators. This trend reflects increasing recognition of the region’s potential and the need for scale.
Pre-pandemic, Accor acquired Atton Hoteles in Chile and Peru, while Wyndham picked up Fen Hotels in Argentina. Although these moves were initially driven by the brands’ desire to gain quick scale, investor appetite has only grown since. More recently in 2021, Aimbridge acquired Grupo Hotelero Prisma in Mexico, along with its 42 hotels, instantly becoming one of the country’s largest managers. In 2022, Advent International took a majority stake in GHL Hoteles, signaling that private equity sees real value in professionalized third-party platforms.
These deals are reshaping the landscape. Consolidation creates scale, which translates into more negotiating power with suppliers, more robust distribution networks, and the ability to spread corporate resources across multiple markets. For employees, it creates new career pathways: professionals can move across borders, brands, and functions while remaining within a single company. For owners, it introduces new optionality: even small independents can now tap into the efficiencies and back-office support of institutional platforms, leveling the playing field.
At the same time, these dynamics make it increasingly difficult for independents to remain competitive without professional support. The cost advantages and operational depth of scaled third-party managers mean that stand-alone hotels may struggle to keep pace unless they partner with a manager or brand.
Why This Matters for Latin America
The growth of third-party management in Latin America carries far-reaching implications. First, it will improve service quality and operational standards, addressing a long-standing weakness in the region’s lodging sector. Second, it will generate more institutional-quality cash flows, a prerequisite for attracting large-scale real estate investors and global capital. Third, it creates the conditions for a more active mergers and acquisitions environment, as investors seek to consolidate fragmented operators into scalable platforms.
Beyond capital markets, there are important societal benefits. Greater professionalization means better training and career mobility for hospitality workers, more consistent property maintenance, and improved guest experiences. This translates into stronger reputations for destinations, more repeat visitation, and ultimately greater economic impact for communities.
The Next Frontier: AI and Technological Disruption
Looking ahead, the next wave of transformation could be even more disruptive. Artificial intelligence is already reshaping hospitality globally—whether through automated revenue management, dynamic pricing, or guest-facing service tools like virtual concierges.
For third-party managers in Latin America, the ability to integrate AI into both back-office functions (accounting, procurement, HR) and customer-facing activities (chatbots, personalized recommendations) could be catalytic. Operators that embrace these tools will not only unlock efficiency gains but also deliver differentiated guest experiences, helping them leapfrog legacy challenges.
If the region is indeed at an inflection point today, AI has the potential to accelerate that growth exponentially. The combination of rising professional standards, increasing investor attention, and technology adoption creates a powerful recipe for structural change.
Exciting Times Ahead
Latin America’s tourism sector stands on the cusp of a historic transformation. Third-party hotel management companies—once peripheral players—are now central to the region’s evolution. Local champions are expanding across borders, U.S. operators are entering with intent, and global investors are consolidating platforms.
The outcome will be a more professional, efficient, and globally competitive lodging sector. This, in turn, will attract new institutional capital, fuel M&A activity, and create broader career opportunities for hospitality workers. If these trends are matched with the bold adoption of AI, the region could witness unprecedented catalytic growth.
For owners, investors, and policymakers alike, the message is clear: Latin America’s hotel industry is entering a new era—one of scale, sophistication, and opportunity—where third-party management is set to redefine the very fabric of tourism across the region.
