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Editor’s Note: This is the last part in a 15-part series (appearing on LodgingMagazine.com each Monday) examining the performance of various markets in the United States. The following is courtesy of Deloitte’s “Hospitality Vision US Performance Review."
In 2011, a record number of tourists visited New York City — slightly more than 50 million people — generating an economic impact of around $48 billion and supporting 320,000 jobs in the five boroughs.
STR reports that the city realized a modest 6.2 percent boost in revPAR (compared to 14 percent in 2010). But the occupancy rate hit 81.3 percent, after an increase of 0.2 percent (suggesting limited capacity for growth overall). Compared to other markets, New York still maintains the highest average room rate (ADR) at $240.79 (all figures are through November).
At a press conference in November, Mayor Michael Bloomberg affirmed that the city’s $31 billion hospitality industry is growing, despite the struggling economy. By the end of 2011, New York had 90,000 hotel rooms. Of the expected 2012 hotel openings, 40 percent are in boroughs outside of Manhattan and particularly feature budget properties.35
Deal volume in the New York hotel market doubled in 2011. According to a report by Jones Lang LaSalle Hotels, deal activity reflected a combination of increased room demand, the rising stock prices of real estate investment trusts, and the loosening of credit markets. Participants included institutional funds seeking liquidity, brands wanting to improve their assets and retain management contracts, and investors seeking to exploit the dramatically improving transactions market and low-cap rates.
Marriott International, announced a franchise agreement to develop the Courtyard and Residence Inn Manhattan/Central Park, a new 68-story property housing two different hotels — a 378-room Courtyard by Marriott hotel and a 261-room Residence Inn by Marriott hotel. Hersha Hospitality added two hotels to its New York City portfolio — the 112 room Holiday Inn Express Wall Street and the 81 room Hampton Inn Financial District — for nearly $70 million. Sheraton New York Hotel and Towers announced a $150 million renovation project, part of the hotel's commitment to enhance its global portfolio.
The first Conrad hotel in New York City opened 463 luxury rooms in the financial district. In June, London-based YOTEL also opened its first US hotel, promising visitors to New York a high-style, low-priced alternative, while Hilton Hotels & Resorts opened Hilton New York Fashion District.
At the same time, almost a third of all hotels opening in Manhattan in 2011 were boutique or lifestyle hotels, and more than half of the 33 new properties that came online were independent hotels, according to researchers in Tourism and Management at New York University.
Wedding-generated hospitality revenue is likely to increase significantly over the next three years, according to a report from the Independent Economic Conference, as same-sex marriage ceremonies promise to generate at least $284 million in spending, while putting another $27 million in taxes and license fees into the state’s coffers. But as reported by The Daily Beast, these estimates are very conservative as they assume an average cost of $4,000 per wedding (the average wedding in New York City costs about $70,000, while the national average is closer to $30,000). Revised estimates climb up to at least $2 billion, with hotels and event spaces being the biggest winners.
In October, Mayor Michael R. Bloomberg announced that a new 4,000-passenger ship would make New York City its year-round home port beginning in May 2013. The ship, the largest ever to home port in the city, will bring an estimated 140,000 additional embarking passengers into New York over two years, resulting in an estimated $35 million in additional direct spending.
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