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Manhattan Operating History The following table illustrates aggregate occupancies and average rates for contributing Manhattan hotels since 1987, as compiled by Smith Travel Research (STR). The table also summarizes marketwide rooms revenue per available room (RevPAR); this figure, which is calculated by multiplying occupancy by average rate, provides an indication of how well rooms revenue is being maximized.
Jonathan M. Tisch
Chairman, NYC & Company New York City continues to be a major visitor destination for domestic and international travelers, in fact, we hold the position as the top U.S. destination for overseas visitors. After a few trying years for the travel industry, improving national and global economic conditions, coupled with the weak dollar, are generating a travel and tourism resurgence. The visitor volume New York City experienced in the fourth quarter of 2003, continued through the first three months of the year with strong hotel occupancy figures. The good news in the tourism industry is even better news for New York City, as visitor spending supports hundreds of thousands of jobs in all five boroughs. The Manhattan hotel market has experienced dramatic cycles since the late 1980s. A significant downturn occurred in the early 1990s, reflecting the combined impact of supply additions, the nationwide recession, several disappointing years in the financial markets, and the Persian Gulf War; the result was a substantial decline in both occupancy and RevPAR. Signs of true recovery began to appear in 1993, and by the end of 1994, it was clear that a dramatic improvement in the market was underway. With the exception of 1999, which saw a substantial increase in supply, overall RevPAR registered double-digit growth each year from 1994 through 2000. A second significant downturn started in 2001, as a result of the slowdown in the national and regional economies, as well as the September 11 terrorist attacks; the result was even more dramatic than that of the previous recession, with a RevPAR decline of 21.7%. In 2002, marketwide occupancy rose slightly, as many hotels in the market employed a strategy of aggressive rate discounts to stimulate demand and maintain occupancy levels; marketwide average rate decreased further, resulting in a RevPAR decline of 4.5% compared to 2001. Despite a RevPAR decline of 1.4%, composed of a 1.0% growth in occupancy and a 2.3% decline in average rate, 2003 ended on a very positive note for the Manhattan lodging market. While the first half of the year was severely impacted by the adverse effects on travel due to the war in Iraq and the outbreaks of the SARS epidemic, demand levels in Manhattan started rising in June, with overall occupancy increasing from four to six percent in each month through the end of the year. With demand compression increasing, average rate showed positive growth in October through December. Overall, RevPAR registered strong increases in the last four months of the year, rising at rates ranging from seven to nine percent in each month. The following chart illustrates the Manhattan lodging market performance from 1987 through 2003.
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