NEW YORK (Diya TV) — Zohran Mamdani’s administration has approved a nearly $1.9 billion contract with the hotel industry to house homeless families in New York City hotels over the next three years. The agreement highlights the city’s ongoing struggle to provide shelter for tens of thousands of people who rely on the municipal system each night. City officials say the deal ensures emergency capacity while the government works to reduce its reliance on commercial hotels for temporary housing.
The contract, valued at about $1.86 billion, was signed with the Hotel Association of New York City Foundation. The group represents nearly 300 hotels across New York City. The agreement allows the city to use hotel rooms as emergency shelter for homeless families through the next three years. Officials say the contract gives the Department of Homeless Services flexibility to secure rooms quickly when demand rises.
Despite a decline in migrants arriving in the city, New York still faces heavy demand for shelter beds. Officials say more than 85,000 people seek housing in city shelters every night. Vijay Dandapani, president and CEO of the hotel association, said the contract focuses on emergency needs.
“The contract is for emergencies, not migrants,” Dandapani said. He added that the city will only pay for hotel rooms when it uses them. City officials expect total spending to remain below the contract’s maximum value because payments depend on how many rooms the city actually uses.
New York City operates one of the largest homeless shelter systems in the United States. A 1981 court agreement requires the city to provide shelter to anyone who requests it. Advocates say the rule protects vulnerable residents but also places heavy pressure on the city’s housing system.
The Department of Homeless Services currently has a separate $929 million agreement with the hotel association that runs from Jan. 1, 2025, through June 30. That contract allows the city to use up to 10,651 hotel rooms for homeless families. According to the city comptroller’s office, the city has already paid more than $626 million under that agreement.
Officials began relying heavily on hotels during the COVID-19 pandemic. At that time, the city needed thousands of extra rooms to reduce crowding in shelters and limit the spread of the virus. Later, the migrant influx added even more pressure. During the peak of the crisis, the city sheltered nearly 100,000 people each night. That marked the highest level since the Great Depression, according to the Coalition for the Homeless.
Some policy experts criticize the new contract. They argue the city should use a competitive bidding process instead of negotiating a single large agreement. Nicole Gelinas, a senior fellow at the Manhattan Institute think tank, said the deal sets a troubling precedent.
“It’s basically a no-bid contract,” Gelinas said. She added that hotels should compete against one another to lower costs.
Gelinas also noted that New York already has some of the highest hotel prices in the country. She said using thousands of rooms for shelters reduces availability for tourists and could raise rates across the city. Tourism plays a major role in the city’s economy, and critics say removing rooms from the market may hurt that industry.
City officials say they plan to reduce reliance on hotels in the long term. Mamdani has ordered the Department of Homeless Services to dismantle a separate shelter system that once served migrants in hotels. The administration also plans to expand traditional shelters that offer more services for families with children. Nicholas Jacobelli, a spokesman for the Department of Homeless Services, said the transition will take time.
He said hotel shelters lack some resources that permanent family shelters provide. Those resources include specialized support programs and expanded services for children. However, Jacobelli said the city still needs emergency capacity while it builds new housing and shelter units. The contract ensures the city can respond quickly during unexpected crises, such as extreme weather or sudden spikes in homelessness.
Homelessness advocates say hotel shelters are far from ideal but remain necessary. David Giffen, executive director of the Coalition for the Homeless, said the city must maintain enough beds to keep people safe. Recent winter weather highlighted the risks of sleeping outdoors. At least 15 people died from freezing temperatures during a cold snap earlier this year. Giffen said those deaths show why emergency shelter capacity remains critical.
He added that the long-term solution lies in building more affordable housing for low-income residents. Until that happens, the city will likely continue relying on temporary solutions, including hotel rooms, to meet its legal obligation to provide shelter for anyone in need.
