Cristyne L. Nicholas,
President & CEO,
NYC & Company

Between 1993 and 1999, the number of visitors to New York City grew by more than 37%; visitor spending jumped 54%; and the total economic impact of tourism grew by 59%. Family travel alone has increased 27% since 1995. Tourism supports 277,000 New York City jobs and annually generates more than $863 million in New York City taxes. 

In 2001, we expect there to be modest growth - 2% to 3% - in the visitor industry. It is important to keep in mind the fact that overall visitor activity is still robust, although not at the unprecedented boom level of 2000. New York City, this year, is well ahead of 1999 levels and is keeping on track in a 5-year pattern of growth. 

We expect the third and fourth quarters of this year to rebound from the current downtrend and the city to welcome more than 39 million visitors by the end of 2001, with a total economic impact close to $25 billion. 

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	Timeshare Services
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	Investment Services
	Hospitality Venture Services
	HVS/The Ference Group: Operational & Management Strategy Development
	Technology Strategies
	HVS Convention, Sports, & Entertainment Facilities Consulting
	HVS Capital Corp.

In the first-class market, an 8% increase in available room nights from the introduction of the Hilton Times Square, the Embassy Suites Battery Park City, and the Sofitel, coupled with a 3% drop in real demand, caused the segment�s occupancy to drop by 9.4%. Still to come in this segment in January of 2003 is the 860-room Westin, a convention hotel at 8th and 42nd that will be the largest addition to the city�s supply of first-class convention-oriented hotels since the Crowne Plaza Times Square opened in 1991. Not surprisingly, Midtown operators alluded to particular concern about the Westin�s upcoming impact.

The luxury segment, the hardest hit by occupancy declines, is also poised for several significant additions. The opening of two Ritz-Carltons, one at Battery Park City in October of 2001 and one on Central Park South in January of 2002, will increase luxury supply by more than 584 rooms. Construction continues on the Mandarin Oriental, which is due to open in January of 2004. From the first quarter of 2000 to the first quarter of 2001, real demand for luxury room nights dropped 13%, causing the segment to post a 68.3% occupancy level.

Though significant supply increases eroded occupancy levels in the fourth quarter of 2000 and the first quarter of 2001, as of May, 2001, the majority of new supply has entered the market. In addition, historical data has shown that increases in demand generally lag supply by anywhere from three to six months, indicating that the second half of 2001 should be significantly stronger than the first. Future supply increases should prove to be more manageable citywide, though particular additions � the W Times Square, the two Ritz-Carltons, and the Westin � may impact particular properties or segments. New supply is stabilizing quickly, as shown by the comparative performance of established and new hotels.

The reactions of hotel operators to the diluted occupancies and the potential softening in demand will shape the performance of the Manhattan lodging market into the second quarter and beyond. HVS selected a pool of Sales Directors and General Managers at 38 Manhattan hotels to interview in order to inquire about their reactions to the changes in the market and to gauge the severity of the downturn. Graduate students of NYU�s Preston Robert Tisch Center for Hospitality, Tourism, and Travel Administration conducted telephone and e-mail interviews with members of the pool between April 13, 2001, and April 27, 2001. Interviewees concurred both on a softening in market demand and on evidence of an economic slowdown in their advance bookings for 2001. 

For the first quarter of 2001, hotel operators reported occupancy declines ranging from 1% to 10%. Within the pool of interviewees, large branded properties, particularly those in Midtown, suffered less of an occupancy drop than independent, boutique, or luxury properties; those outside Midtown; or those dependent on particular industries or demand generators. Changes in ADR were split evenly between increases and decreases over the first quarter of 2000, ranging from a 7% increase to a 2% decrease. First-quarter RevPARs dropped between 2% and 9%. 

By April, several operators had revisited their annual budgets and adjusted their forecasts downward. For the year, most operators predicted that occupancy would drop 2% to 6% from 2000 levels. ADR predictions for the year ranged from no change over 2000 to a 5% increase. Generally, hotel operators believe that year-end RevPAR results will fall from last year, though certain operators forecasted an increase of up to 5%.

First-Quarter Operating Statistics By Market Segment

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Click on the links below for information on:

New York City Hotel Survey

HVS International

The Preston Robert Tisch Center for Hospitality, Tourism, and Travel Administration

New York University Annual International Hospitality Investment Conference

Acknowledgements

Manhattan Operating Statistics

New Supply

Recent Changes to Hotel Supply in Manhattan

Manhattan First-Quarter Operating History

Proposed Hotels in Manhattan

First-Quarter Operating Statistics by Market Segment

Manhattan Operating History and Forecast

Click on the links below to read quotes from the following individuals:

Rudolph W. Giuliani,
Mayor,
New York City

Jonathan M. Tisch,
Chairman & CEO,
Loews Hotels;
Chairman,
Travel Business Roundtable

Joseph E. Spinnato,
President,
Hotel Association of NYC, Inc.

Randy Smith,
President,
Smith Travel Research

Stephen Rushmore,
President and Founder, 
HVS International

Cristyne L. Nicholas,
President & CEO,
NYC & Company

Dr. Lalia Rach,
Associate Dean,
Preston Robert Tisch Center for Hospitality, Tourism, and Travel Administration,
New York University

To download a printable PDF version of this survey, click here.