Manhattan Hotel Market Overview
HVS Global Hospitality Services,
in cooperation with New York University’s Preston Robert
Tisch Center for Hospitality, Tourism, and Sports Management,
is pleased to present the twelfth annual Manhattan Hotel Market
Overview.
Once again, in 2008 Manhattan was the top-performing
hotel market in the U.S. in terms of RevPAR. Occupancy remained
impressive, in the mid-80% range. However, average rate gains
were more modest than in the previous four years because of
the heightened economic crisis in the last quarter of 2008.
Despite the recent tumultuous economic times and the previous
recessions that affected the Manhattan hotel market, all segments
and all neighborhoods averaged growth in demand stronger than
the growth in supply from 1987 to 2008; these fundamentals
highlight the strength of the Manhattan market across the
board. As a result of these favorable supply and demand dynamics,
average rate grew well above the inflation rate during the
historical period reviewed, pushing RevPAR up, and sustaining
fairly high values. Considering the current climate, HVS forecasts
that the Manhattan market will bottom out in 2011, with RevPAR
returning to close to its 2008 peak level by 2013. We expect
hotel values in Manhattan to follow a similar trend, reaching
their low point in 2010 and returning to the previous peak
level in 2013; this scenario assumes that the current recession
will not fundamentally change corporate and transient customers'
travel patterns over the long term and that financing returns
to normal leverage levels.
For most U.S. hotel markets, 2008 represented the first year of
the recession; however, the Manhattan lodging market was able
to weather the economic downturn during the first nine months
of the year and closed 2008 with moderate growth, remaining the
top-performing market in the U.S. An analysis of the monthly trends
for 2008 reveals that the Manhattan market experienced a RevPAR
increase of 9.0% through September, followed by its first decrease
in RevPAR since June 2003 as the economic recession heightened.
Despite a minor decrease in occupancy in 2008, the Manhattan market
registered a 2.5% increase in average rate for the year, yielding
a RevPAR increase of 1.4% in 2008. Although a larger-than-ever
construction pipeline is poised to enter the Manhattan market,
significant barriers to entry, including high construction costs,
prohibitive land costs, and a lack of available sites, will continue
to remain key factors when considering the construction of lodging
facilities in Manhattan. It is also important to note that due
to the protracted disruption in the capital markets and the slowdown
in the U.S. and local economies, the anticipated new supply represents
an approximate 36.0% decrease from our estimate last year. In
light of the current market parameters, we forecast overall RevPAR
to decline in the near term, reaching its low point in 2011 and
returning to its 2008 peak level by 2013.
HVS Global Hospitality Services
HVS is a global services
and consulting organization focused on the hotel, restaurant,
shared ownership, gaming, and leisure industries. Since the
launching of the firm in 1980, our clients have relied on our
specialized industry knowledge and expertise for advice and
services geared to enhancing economic returns and asset value.
Through a network of more than 25 offices staffed by approximately
300 seasoned industry professionals, HVS offers a wide scope
of services that track the development and ownership process.
Starting with an HVS market feasibility and appraisal study,
a newly conceived project is justified. Financing through the
HVS investment banking team is then arranged, interiors designed,
and management hired. Sales and marketing strategies are developed,
and organizational assessments are made. When a client requires
actual, on-site hotel or restaurant management and marketing,
HVS offers these specialized services as well. HVS asset management
provides constant operational oversight to ensure the maximization
of economic returns and asset value. No other organization offers
such a broad range of services. HVS also has specialists in
parking operations, golf courses, and convention centers.
Since the year 2000, HVS has performed nearly 20,000 assignments
throughout the world for virtually every major industry participant.
Our principals literally “wrote the book” on hospitality
consulting, authoring numerous authoritative texts and hundreds
of articles. HVS is client driven, entrepreneurial, and dedicated
to providing the best advice and services in a timely and cost-efficient
manner.
About NYU’s Preston Robert Tisch Center for Hospitality,
Tourism, and Sports Management
The Preston Robert Tisch Center for Hospitality, Tourism,
and Sports Management, a division of NYU’s School of Continuing
and Professional Studies (www.scps.nyu.edu),
offers undergraduate, graduate, and continuing education programs
that develop professionals with in-depth industry knowledge
and the critical thinking skills necessary for leadership roles
in the fields of hospitality, tourism, and sports management.
The Center’s full-time and adjunct faculty is composed
of leading practitioners and researchers. Its board of advisors
includes senior executives who advise on curricula development
and help ensure that coursework reflects the latest industry
trends and needs. The Tisch Center’s location in the heart
of New York City—one of the world’s premier tourism
and sports destinations—provides its students with multiple
internship and networking opportunities, as well as the chance
to study at several on-site “industry classrooms”
at such venues as The New York Marriott Marquis, The Waldorf=Astoria,
Chelsea Piers, and the NBA Store.
New
York University Annual International Hospitality Industry Investment
Conference
The 31st Annual NYU International Hospitality Industry Investment
Conference is Sunday, May 31, 2009, to Tuesday, June 2, 2009,
at the Waldorf=Astoria in New York City. The Preston Robert
Tisch Center is the host of the event, and HVS is a valuable
partner. Once again, our team of professionals looks forward
to welcoming you to this prestigious event.
Acknowledgements
Randy Smith of Smith
Travel Research (STR) provided the Survey’s comprehensive
hotel statistics for Manhattan. STR continues to be the leading
source of hospitality industry operating statistics. HVS also
acknowledges the assistance of STR’s Jan Freitag, who
rendered valuable support. We would also like to thank Joseph
E. Spinnato and Rick Amatto of the Hotel Association of New
York City (HANYC), as well as Brenda Fields and Kathie Stapleton
of the Greater New York Chapter of the Hospitality Sales and Marketing
Association International (HSMAI) for their assistance. Additionally,
in cooperation with New York University, the data-gathering
process was largely a contribution of five Tisch Center graduate
students—Simone Baradei, Rick Kelly, Robert Washington,
Yun Wang, and Zheyi Chen—through the coordination of Dr.
Frederic B. Mayo. HVS is pleased to have been a part of this
enriching educational process.
HVS Global Hospitality Services would also like to thank its
own Manhattan
specialists, Roland
de Milleret, Senior Vice President, and Jonathan
Sebbane, Vice President, for their invaluable contribution
and dedication to this project.
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