HVS Global Hospitality Services has analyzed data provided by STR Global to illustrate the effects of the current state of the economy on different classes of hotels in Manhattan. The following graph presents the annual percentage RevPAR changes since 1999 for the luxury, boutique, first-class, select-service, and limited-service hotel segments.

The following graphs compare the supply and demand changes, categorized by individual hotel segment, for all reporting hotels in Manhattan, using the historical data available through 2009. We note that the annual periods vary.

A review of the previous charts reveals the following:

• Despite the recent tumultuous economic times and the previous recessions that affected the Manhattan hotel market, all segments still experienced overall growth in demand stronger than the growth in supply during the observed periods, indicating the strength of the Manhattan market.
  
  
• The luxury segment experienced the slowest growth in supply, expanding at an average annual compounded rate of 0.4% from 1990 to 2009, and representing a net addition of roundly 580 rooms only. As a result of the closing of several luxury hotels for conversion to condominiums, supply within the luxury segment decreased by roundly 14% between 2004 and 2007. The change in supply in 2009 resulted from the reopening of 150 transient rooms at the Mark Hotel as well as the reopening of the Surrey as a luxury hotel.
  
  
• The select-service segment experienced the greatest increase in supply during the observed period, expanding at an average annual compounded rate of 3.9% from 1992 to 2009. In 2009, this segment experienced a roundly 20% increase in supply due to the opening of several properties on the city block bounded by 39th and 40th Streets and Eighth and Ninth Avenues. In 2009, the boutique segment recorded the second-strongest increase in supply, growing by 3.5%; this growth included the opening of several properties in Midtown, such as the Ace Hotel, and in Downtown, such as the Crosby Hotel.
  
  
• As a result of the strong supply and demand dynamics, average rate grew at an above-inflation level for most segment types during the observed period, with the select-service and limited-service segments exhibiting the strongest increases, at 4.7%. The strong performances associated with the select-service and limited-service segments indicated a notable amount of unaccommodated demand for those two segments; this demand is being accommodated by the large number of select-service and limited-service hotels that opened recently in Manhattan and continue to be absorbed. All segments were negatively affected by the latest recession. Nevertheless, most segments achieved occupancy levels at or above the 80% mark. The luxury segment was the only one to maintain price integrity, with an average rate decrease below that of the market. The below-market performance experienced by the boutique segment is the result of the lack of both a brand affiliation and a strong reservation system, as well as its greater exposure to the financial sector.