New York City hotel rates could climb even higher after hotel owners signed what industry officials describe as the most expensive union contract in the industry’s history, locking in major wage increases for workers while raising affordability concerns for travelers and smaller hotels.

The agreement, reported by The Wall Street Journal, reached last week to avoid a strike ahead of next month’s FIFA World Cup kickoff, increases hourly pay for most hotel workers by roughly 50% over eight years. By 2032, some housekeepers are expected to earn six-figure salaries.

Hotel owners say the deal will significantly raise operating costs in a city that already has some of the nation’s highest average hotel prices outside major resort markets. New York hotel rooms averaged $334 per night last year, according to CoStar.

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Hotel owners say the deal will significantly raise operating costs in a city that already has some of the nation’s highest average hotel prices outside major resort markets. (iStock)

“The only way to maintain your profit when your costs go up is to keep raising your rates,” Cornell University hospitality professor David Sherwyn told The Journal. 

Industry officials estimate the new contract will increase annual property operating costs by about 15%, adding pressure on hotels to pass those expenses onto consumers at a time when many travelers are already facing higher fuel, airfare and vacation costs.

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The agreement was reached last week to avoid a strike ahead of next month’s FIFA World Cup kickoff. (Photo by Eva Marie Uzcategui – FIFA/FIFA via Getty Images / Getty Images)

The labor agreement also arrives at a difficult moment for hotel operators who had hoped the FIFA World Cup would deliver a major tourism boost. As of mid-May, New York City hotel occupancy for June – when the tournament begins – was running about 12 percentage points below last year’s levels, according to CoStar, despite the region hosting eight matches, including the championship final.

Analysts say some tourists and business travelers may be avoiding the city because of concerns about crowds and soaring World Cup ticket prices.

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Luxury hotels are expected to fare better because higher-income travelers have continued spending despite rising costs. Midrange and lower-tier hotels could face greater pressure as lower-income households reduce travel spending this year, according to Bank of America Institute data.

Industry officials estimate the new contract will increase annual property operating costs by about 15%. (Gary Hershorn/Getty Images)

International tourism also remains a concern for the city’s hotel industry. Hoteliers say overseas bookings weakened earlier this year amid geopolitical tensions tied to the Iran conflict, though some operators report demand is beginning to recover.

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Hotel executives warn that additional risks – including higher airline ticket prices, flight cuts and concerns about U.S. border screenings – could further slow the recovery in international travel, which has long been considered a critical driver of New York’s tourism economy.

The boss of Oxford University’s flagship spin-out fund has delivered a stinging verdict on the City’s biggest savers, accusing UK pension funds of being “way off the pace” when it comes to writing cheques for the country’s most promising technology businesses, despite successive governments promising to fix the problem.

Ed Bussey, chief executive of Oxford Science Enterprises (OSE), said reform efforts such as the Mansion House accord, under which seventeen of Britain’s largest workplace providers voluntarily pledged to put more of their members’ savings into private and high-growth companies, are simply not moving quickly enough to keep up with the pace at which Oxford-rooted businesses are scaling.

“Everyone’s diagnosed the problem, but the movement towards the solution is just way off the pace in terms of the speed at which we and others are building companies,” Bussey told Business Matters. “We’ve got companies with technology that should be thinking about $100 billion in terms of the scale of opportunity, and that’s reflected in the international capital — and particularly US capital — that is being attracted into these sorts of companies.”

A british problem with American fingerprints

The numbers tell their own story. Bussey said the vast majority of the £300 million in external capital raised by OSE’s portfolio companies last year came from American investors rather than domestic backers. Across the wider market, UK scale-ups now source as much as 80 per cent of their funding from overseas, according to figures from UK Private Capital, the trade body for the British private equity and venture industry.

“There’s nothing wrong with US money per se,” Bussey said. “But the share of UK money, particularly UK pension money, just needs to be dialled up about ten times. I think there’s a lack of understanding [within pension funds] of this space, of the opportunity, of the potential returns.”

His frustration was sharpened by a recent conversation with a Gulf-based backer. “One of my Gulf investors said: ‘You are sitting on our equivalent of Gulf oil.’ But UK pension funds are largely missing in action from this opportunity. The rest of the world scratches its heads when they look at this.”

It is a complaint that will sound familiar to anyone who has tracked the growing chorus calling on Britain’s pension giants to back homegrown scale-ups before the upside is shipped offshore. For all the political enthusiasm around turning the UK into the “next Silicon Valley”, the capital that ultimately reaps the rewards of British science still tends to be raised in Boston, San Francisco or Abu Dhabi — not in Edinburgh or the Square Mile.

The Mansion House promise, and its critics

Both the previous Conservative administration and Sir Keir Starmer’s Labour government have made unlocking domestic pension capital a flagship policy. The 2023 Mansion House compact set a target of 5 per cent of default fund assets in private markets. Last summer, that ambition was doubled when seventeen workplace pension providers signed up to the Mansion House accord, formally announced by the Treasury, agreeing to allocate at least 10 per cent of their default funds to private assets by 2030, with at least half of that ringfenced for the UK, releasing an estimated £25 billion into the domestic economy.

Lord Vallance of Balham, the science minister, conceded the pace had been a source of impatience but insisted momentum was building. “Is it as fast as everyone wants? No. But it’s starting and I really believe that’s going to change quite rapidly,” he said.

Critics, however, argue that without firmer incentives — or, more controversially, mandates, Britain’s defined contribution savers will continue to underwrite foreign infrastructure and foreign pensioners’ retirements rather than the domestic innovation economy. As Business Matters publisher Richard Alvin has previously argued, the UK’s real scale-up crisis is one of conviction as much as capital: a structural inability to back our own.

From lab bench to billion-pound business

Bussey’s broadside arrived alongside OSE’s latest annual report, which painted a far brighter picture of operational performance. Net asset value rose 17 per cent year-on-year to £1.26 billion, lifted by two landmark exits.

In September, IonQ’s $1.08 billion acquisition of quantum computing pioneer Oxford Ionics handed OSE its first unicorn exit. Before the year was out, the fund also completed the sale of cancer-drug discovery business Dark Blue Therapeutics to US biotech giant Amgen in a deal worth up to $840 million. Between them, the two transactions returned more than £283 million to OSE.

Bussey said further realisations were now firmly in view. “Within the next two to four years we’re going to hit a phase of regular realisations. We’ve proven that we can take science out of a lab and create a billion-pound company. What’s more exciting is now we’ve got line of sight to that happening on a consistent basis.”

For Britain’s SME ecosystem, and the universities, investors and founders trying to turn world-class research into world-class companies, the question is whether the country’s own pension savers will own a meaningful slice of that upside, or whether, once again, the wealth created in British labs will end up funding retirements on the other side of the Atlantic.

Amy Ingham

Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.

Americans remain optimistic about the country’s ability to harness innovation and think it should be easier to build things in America, while they’re also skeptical about the government’s role in solving the issues confronting the nation, a new survey finds.

The findings of the Ronald Reagan Institute’s Reagan National Economic Survey, reviewed exclusively by FOX Business, showed that 65% of registered voters were optimistic about American-led innovation in areas like medicine, energy and artificial intelligence (AI) – including 81% of Republicans, 59% of Democrats and 57% of Independents.

“Americans are really optimistic about our future, which isn’t something that you would get just by looking at the media and kind of day-to-day portrayals of where Americans are,” Dan Rothschild, director of the Center for Civics, Education, and Opportunity at the Reagan Institute, told FOX Business.

“Members of Gen Z in particular have a 50-point net positive rating on the ability of American science and technology to build a better future. For a generation that’s widely described as being pessimistic, I thought that was a really stark finding,” he added.

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The Reagan National Economic Survey found that Americans think it’s generally too hard to build housing in their communities. (Joshua Lott/Bloomberg via Getty Images)

The survey asked Americans if they think it’s too hard, too easy or about right in terms of the difficulty of building housing, roads and highways, and factories in their communities – with respondents saying it’s generally either too hard or about right. 

In terms of housing, the survey found that 54% think it’s too hard to build homes versus 36% who said it’s about right, with 9% saying it’s too easy. 

The share of voters saying the difficulty is about right for building new roads and highways (48%) narrowly outpaced those saying it’s too hard (44%), and was well above the 8% who said it’s too easy. A similar pattern played out for factories, with 45% saying the ease of building was about right, while 43% said it’s too hard and 11% said it’s too easy.

“I was positively impressed by how much Americans want to build,” Rothschild said. “The vast majority of Americans believe that it is either too hard to build one or more of those types of facilities or that it’s just about right. Nobody believes, effectively, that we’re building too much.”

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The survey also asked Americans about their views of former President Ronald Reagan’s economic policies. (Diana Walker/Getty Images)

The survey also asked Americans about their views regarding former President Ronald Reagan’s economic policies as commander-in-chief, finding a strong plurality believes his policies were generally positive for the country. It found that 47% of respondents said Reagan’s policies were good for America, versus 31% who said they weren’t. 

There was a notable partisan split on the question, with Republicans favoring Reagan’s policies good for the country by a 78% to 4% margin. Independents generally agreed, albeit by a smaller margin of 42% to 32%. 

A majority of Democrats took the opposite view, with 52% saying his policies were bad for America and 24% saying they were good for the country.

“You’ve got a loud group, mostly online, saying that President Reagan’s economic projects were bad for America, that we need to reject so-called ‘zombie Reaganism.’ We find basically no data that there’s a group of Republicans and Republican-leaning voters that believe this,” Rothschild said.

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Americans largely agree that Reagan’s statement that government is the problem, rather than a solution, is true today. (Getty Images)

Voters were also asked whether they agree with Reagan’s statement from his first inaugural address that, “In our present crisis, government is not the solution to our problem; government is the problem.”

The question found broad agreement among Americans, with 81% of registered voters saying they think that statement is true today. That figure includes 93% of Republicans, 82% of Independents and 69% of Democrats.

“It probably means different things to different respondents and different voters. But I take away from it that it’s a vote of confidence in the American people, in American business, in American civic society – and not a vote of confidence in politicians to fix what’s wrong with America,” Rothschild said.

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