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HVS International/NYU Present 2004 Manhattan Hotel Market Overview

HVS Press Release
  • Manhattan Market Showed Signs of Recovery in 2003
  • Manhattan to Achieve a RevPAR Increase of 7.8% by Year-End 2004
  • Manhattan to Reach 1999 Occupancy Levels by 2006
  • Manhattan to Reach 2000 Average Rate Levels by 2006
HVS International, a global hospitality consulting firm, in conjunction with New York University’s Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management, recently completed the 2004 Manhattan Hotel Market Overview. The Manhattan lodging market ended in 2003 on a very positive note in 2003, despite a RevPAR decline of 1.4%. While the first half of the year was severely impacted by the adverse effects on travel due to the war in Iraq and the outbreak of the SARS epidemic, demand levels in Manhattan started rising in June, with overall occupancy increasing from four to six percent in each month through the end of the year. With demand compression increasing, average rate showed positive growth in October through December. As a result, the Manhattan hotel market experienced a moderate 1.0% growth in occupancy and a 2.3% decline in average rate. “After three years of negative forecasts and shrinking profits, the proverbial light at the end of the tunnel is rapidly expanding. There is a palatable sense of promise permeating the NYC hotel industry,” expressed Dr. Lalia Rach, Associate Dean, The Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management. Cristyne L. Nicholas, President & CEO of NYC & Company concurs, “this will be the strongest spring travel season since 2001.” Manhattan experienced a supply growth in limited-service facilities, marking the first representation of the following three brands in Manhattan: the Sheraton Four Points, La Quinta Inn, and Hampton Inn. Furthermore, of the 1,653 rooms that are expected to enter the market in 2004 and 2005, 1,031 rooms, or roundly 62%, are anticipated to be limited-service products. Manhattan will welcome the first extended-stay product, the 357-room Residence Inn located in Midtown West in November of 2005. As New York continues to experience an economic expansion prompted by the overall national trend, moderate increases in supply, the expected year-over-year increases in the first four months of 2004, coupled with the favorable exchange rate of the Euro against the U.S. dollar, we expect RevPAR to increase by 7.8% in 2004. Furthermore, we project that by 2006, Manhattan’s occupancy will reach close to 1999 levels and average rate will return to 2000 levels. “HVS International recognizes that the tourism industry is a prime economic generator for New York City. The year 2003 ended on an extremely positive note for the Manhattan lodging sector. Though the first six months of the year were severely impacted by the adverse effects on travel due to the war in Iraq and global uncertainty, demand levels started rising in June,” states Stephen Rushmore, President and Founder, HVS International. He further adds, “we forecast that the Manhattan lodging market will achieve robust growth in 2004.” Also included in the overview are the aggregate operating results of four distinct hotel segments and three neighborhoods. The boutique segment registered the strongest growth in supply from 1998 to 2003. Despite the increases in supply, the boutique segment was the only category to show a positive average annual compounded growth rate in terms of both occupancy and RevPAR. Each hotel segment experienced moderate increases in occupancy from 2002 to 2003, however, average rate continued to register declines. In 2003, the Midtown West area has shown stronger and earlier signs of recovery, which can be attributed to the existence of a strong commercial base coupled with numerous leisure activities. RevPAR in Midtown West remained fairly stable from 2002 to 2003, while that of the other neighborhoods declined by roundly three percent. Five major hotel sales transactions were reported in 2003, all of which occurred in the latter part of the year: the Helmsley Hotel Windsor, the Gorham Hotel, the Roger Williams, the Loews Metropolitan Hotel, and the Doral Park Avenue. Hotel investors expressed that Manhattan’s hotel industry has turned around as buyers are starting to meet seller expectations. For more information regarding the 2004 Manhattan Hotel Overview, contact Roland deMilleret at (516) 248-8828, ext. 269 (rdmilleret@hvsinternational.com), or Peggy Yip at (516) 248-8828, ext. 250 (pyip@hvsinternational.com). HVS International is a global consulting and services organization focused on the hotel, restaurant, timeshare, gaming, and leisure industries. Established in 1980, HVS performs more than 1,500 assignments per year for virtually every major industry participant. HVS International is client driven, entrepreneurial, and dedicated to providing the best advice and services in a timely and cost efficient manner. The Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management at New York University is a dynamic and growing educational and research center located in the heart of Manhattan. The Tisch Center offers an extensive complement of hospitality and tourism academic programs of study, including two bachelor’s degree programs and five master’s degree programs. In concert with its location in the financial and hotel capital of the world, coursework is focused on the areas of hospitality investments, hotel operations, revenue management, and customer relationship management relative to the international hospitality and tourism industry. For further information contact: Leora Halpern Lanz 516-248-8828 x278 Dr. Mark M. Warner 212-998-9107 # # #