NEW YORK— After enjoying a couple years with occupancies above 80%, NYC hotels are expected to end 2001 averaging only 73.3% occupancy, with 2002 numbers projected to fall even lower, according to PricewaterhouseCoopers. Sean Hennessey, hospitality and leisure consultant/PwC, stated that next year’s occupancy levels in New York City are expected to only reach 73%, and ADR is projected to drop from $222.40 in 2000 to $191 in 2002. “Room rates are down dramatically [in New York]since 9/11… primarily because hoteliers are going after online discounts and segments they would typically turn their noses to,” said Hennessey. Specifically, room rates dropped from about $195 in September 2001 to less than $170 in October and November. December is supposed to chime in at $170, representing the lowest ADR experienced in Manhattan since 1995. Upper upscale hotels have been hit the hardest, with some dropping rates as much as $150, he stated. Occupancies also plummeted from more than 85% in August to less than 65% in September. While occupancy began to rally in October and November, peaking just shy of 85%, December so far is looking bleak with levels averaging at about 68%. This marks the lowest December occupancy rate since 1992. Hennessey noted that NYC & Co. has expressed concern over the recent drop in occupancy. “The response of people visiting out of empathy is beginning to fade and people are now wondering where they’re going to get their new customers from,” he said. RevPAR in New York is also going to take a significant plunge, dropping from $125 in November to a projected $116 in December. The first quarter of 2002 is expected to improve slightly to just above $116. Revenues have also declined 20%, and profits have nose-dived almost 50%. “That’s what’s really making the hoteliers crazy,” said Hennessey. In addition, the future is still looking grim for NYC hotel employees. About 3,400 lodging workers have been laid off since Sept. 11, averaging about 45 employees per hotel. “Many hotels are [also]saying that reductions will continue throughout the next year,” he added. With all of these declines, companies holding a significant percentage of Manhattan’s rooms are projected to have a tough year ahead, namely Host Marriott (which has 4, 069 rooms in NYC), Starwood Hotels & Resorts (3,455 rooms), and Hilton Hotels Corp. (3,277 rooms). Also projected to see harsh times are the city’s convention and boutique hotels, said Hennessey. Convention properties can expect to see smaller groups in 2002, less negotiating power when booking corporate rates, and large blocks of empty rooms forcing cuts in ADR. However, boutique hotels will mostly be negatively affected by their lack of franchise affiliation and meeting space, their smaller size, and unrecognizable name without a stable reputation. Overall, Manhattan hotels are slated to fall on even harder times in 2002. Many of 2001’s problems will most likely continue into the coming year, reaching even worse proportions, specifically: fewer flights with less passengers entering New York; the city maintaining its reputation as a potential terrorist target; hotels housing corporations beginning to see tenants move out into more permanent office; and companies continuing to give less group business to hotels at significantly lower rates.
Previous ArticleAtlantica Hotels Acquires Management Company
Next Article Fairmont Set To Add Dubai Hotel In February