NYC giving Texas company millions to book coronavirus hotel rooms

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New York City has shelled out roughly $15.5 million in taxpayer money to Texas travel management company Crewfacilities.com LLC in order to book more than 8,600 hotel rooms at an affordable rate for hundreds of vulnerable homeless shelter residents, front-line hospital workers and recently released Rikers Island inmates to help mitigate the spread of the coronavirus, according to a report by THE CITY.

Hotels where guests were placed reportedly include the Hilton Garden Inn in Times Square, a Howard Johnson in Brooklyn, and the Hollis Hotel in Jamaica, Queens.

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Crewfacilities President Andrea Tsakanikas told FOX Business the contract with the city's Office of Emergency Management was established to help hotels that were shut down due to the pandemic.

"Initially in the beginning, a lot of these hotels were closed," Tsakanikas said. "So we were able to ensure an opportunity for a lot of these hotels to start operating again."

The contract obtained by FOX Business shows Crewfacilities receives $27 per room per night as well as $18 for every breakfast, $19 for every lunch and $34 for every dinner for each guest that checks in. Nightly room rates range from $128 for a room in Queens to $163 in Times Square, and the contract caps hotel-related spending at $250 million.

But Tsakanikas said any money paid to Crewfacilities through the contract by the federal government is going directly to the hotels to cover the meal and room costs.

"We do not keep a cent of that. They're not a fee," she said. "They're the cost to have meals prepared and delivered three times a day to each one of these rooms for anyone that needed to be isolated that was COVID positive."

She noted the room and meal rates are established by the federal government and Crewfacilities' job is to negotiate the rates "way below the government per diem."

According to the U.S. General Services Administration, the government's per diem rate on hotel rooms in New York City was $262 for the month of May, while meals were $18 for breakfast, $19 for lunch and $34 for dinner.

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New York City Councilman Ben Kallos (D-Manhattan), chair of the city contracts committee, has called on Mayor Bill de Blasio to cancel the contract, estimating that the overhead from the contract alone is costing taxpayers roughly $3,000 per month. He told FOX Business the city council is "openly investigating the matter" to make sure meals are actually being provided to those who need it.

"I will be investigating to see that there weren't any false claims and I want the city to cancel this quarter-billion-dollar contract before they spend any more money," Kallos said. "It was a bad deal, and now that we're on the other side of the curve, we need to cancel this contract and do better."

While Kallos believes helping essential workers who can't go home is a good idea, he would prefer to cut out the middle man and give the money directly to the hotels impacted by the pandemic to begin with.

"It's a good way to support the local branch of the economy," Kallos said. "I think it's just the more we can give to hotels directly versus the intermediaries in Texas is preferred."

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He added that he is disappointed that no one from OEM or the mayor's office has taken responsibility for the contract.

"Even if all they say is, 'This was a pandemic and we got what we could get when we could get it and we're going to get a better contract right now,' that's all I'd love to hear," Kallos said.

If the city canceled the contract immediately, Kallos says taxpayers could save the roughly $235 million that hasn't been spent yet.

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The city's Office of Emergency Management did not immediately return FOX Business' request for comment.