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 thirteenth annual Manhattan Hotel
Market Overview.
Steve
Rushmore
President and Founder, HVS
Global Hospitality Services
Historical data illustrate that the
Manhattan market is prone to high volatility, as the
market incurs strong declines during recessionary
periods, followed by even stronger gains during the
recovery. Abiding by the former dynamic, the Manhattan
market realized the largest RevPAR decline in 2009 among
the top 25 markets in the U.S. A significant decrease in
average rate was the major cause of this decline, as
local hoteliers opted to maximize occupancy while facing
a noteworthy expansion in supply. This strategy yielded
a strong occupancy level of over 80% in 2009, despite a
roundly 5.0% increase in supply. Since the fourth
quarter of 2009, the market has illustrated signs of a
prospective recovery. Occupancy levels have consistently
trended upward, and RevPAR has been positive since the
beginning of 2010.
Given these trends, HVS estimates that hotel values in
the Manhattan market have bottomed out. Beginning in
2010, we anticipate that marketwide RevPAR will
progressively trend upward, surpassing its pre-recession
high of 2008 by 2013. We expect hotel values in
Manhattan to follow a similar trend, returning to the
previous peak level by 2014; 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. Overall, the Manhattan market still
remains the premier lodging market in the U.S., given
its standing as the world’s financial capital and status
as a prominent leisure destination.
Despite the worst recession since the Great Depression, a staggering
credit crisis involving New York City’s financial sector,
and a substantial influx of new lodging supply, Manhattan is a
real success story, remaining the top hotel market in the U.S.
in 2009. Tourism fell less than expected, and for the first time
in 20 years, New York City became the most popular tourism destination
in the country, surpassing Orlando. This performance proves that
New York City’s attributes and strong foundation allow it
to bounce back quickly from crises. From an operating standpoint,
hotels in Manhattan were able to maintain a strong occupancy level,
just above the 80% mark. The Manhattan lodging market was sustained
by a weak dollar, low airfares, and a decline in hotel room rates,
which all contributed to push monthly hotel occupancy rates up
slightly from September to December 2009, above the corresponding
2008 levels. As many hotels in Manhattan employed a strategy of
aggressive rate discounts to stimulate demand and maintain occupancy
levels, marketwide average rate decreased in 2009, resulting in
a double-digit RevPAR decline of 26.5% compared to 2008, the market’s
peak RevPAR performance. Overall, while the latest economic crisis
has negatively influenced marketwide RevPAR levels in the short
term, we expect the market to remain strong over the long haul,
given its strong fundamentals and world-class destination status.
In light of the current economic climate and market parameters,
including a further increase in supply, we anticipate that the
market will bottom out in 2010, with pricing power returning during
the second half of the year. As such, we forcast a healthy increase of 4.6%
in RevPAR in 2010 and a substantial gain of close to 10.0% in 2011. With the anticipated
economic recovery, we forecast double-digit increases
in RevPAR in 2012 and 2013. Based on these forecasts, RevPAR for
Manhattan hotels should exceed the pre-recession 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. Established
in 1980 by President and CEO Steve Rushmore, MAI, FRICS, CHA,
the company offers a comprehensive scope of services and specialized
industry expertise to help you enhance the economic returns
and value of your hospitality assets. Through a network of 30
offices worldwide staffed by approximately 400 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 approximately 24,000
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 32nd Annual NYU International Hospitality Industry Investment
Conference is Sunday, June 6, 2010, to Tuesday, June 8, 2010,
at the New York Marriott Marquis. 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 STR Global 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 Amato 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—Michael J. Ahn, Laura Arneson, Monette DeLeon,
Zhe Li, and Jason Sturtevant—through the coordination
of Dr. Ginger Smith and Dr. Mark Warner. 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, MAI, Managing Director, and Jonathan
B. Sebbane, Vice President, for their invaluable
contribution and dedication to this project.
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