Manhattan Hotel Market Overview
HVS International,
in cooperation with New York University's Preston Robert Tisch
Center for Hospitality, Tourism, and Sports Management, is pleased
to present the ninth annual Manhattan Hotel Market Overview.
Stephen
Rushmore
President & Founder, HVS
International
Manhattan hotels shattered records in 2005, recording the highest
average occupancy, 85%, since 1987, the earliest year for which
STR data for Manhattan is available. RevPAR increased by 6%
over the level for 2000, the former peak year, and registered
double-digit growth ranging from 14% to 28% every month in 2005.
The strong RevPAR performance was driven primarily by significant
growth in average rate as hotels operated at near-maximum-capacity
levels, increasing the already present compression in the Manhattan
market. As a result of the strength of the Manhattan lodging
market, hotel values increased between 30% and 50% in 2005 compared
to the previous year. In most cases, hotels are again the highest
and best use for Manhattan properties today. The Empire Hotel,
for example, which was acquired in 2003 with the intention of
converting the property to condominiums, is currently under
renovation and will be reopened as a hotel. In light of the
very positive sentiment in the Manhattan market, HVS expects
further growth in hotel values over the next few years.
In 2005, the Manhattan lodging market continued growing strongly,
with a RevPAR increase of roundly 18.0% compared to 2004. The
market recorded double-digit growth in RevPAR each month of
the year, ranging from a high of roundly 28.0% in September
to a low of roundly 14.0% in January. Overall occupancy of 85.0%
and average rate of $232.31 exceeded the historical peak achieved
in 2000 (83.7% at $222.53); these 2005 performance figures are
also higher than in any other year for which STR data for Manhattan
is available. Continued RevPAR growth is expected in 2006, primarily
fueled by a strong growth in average rate. Due to limited new
supply and increased compression resulting from near-maximum-capacity
occupancy levels, overall RevPAR is expected to experience continued
growth for the next few years.
Based on an overall improved economic climate, strong barriers
to entry, limited new supply, and increased compression, we
forecast the Manhattan lodging market to achieve a robust ±12.0%
RevPAR growth in 2006.
HVS International
HVS International is a global consulting and services organization
focused on the hotel, restaurant, timeshare, gaming, and leisure
industries. Its clients rely on the firm's specialized industry
knowledge and expertise for advice and services geared to enhance
economic returns and asset value. Through a network of 24 offices
staffed by more than 200 seasoned industry professionals, HVS
offers a wide scope of services that track the development/ownership
process.
Starting with the market feasibility and appraisal study, a
project is conceived and justified. Financing through the HVS
investment banking team is then arranged, interiors designed,
and management hired. The latest technology solutions are implemented,
marketing strategies developed, and organizational assessments
made. When a client requires actual, on-site hotel or restaurant
management, HVS offers these services as well. Lastly, HVS asset
management provides constant operational oversight that ensures
the maximization of economic returns and asset value. No other
organization offers such a broad range of complementary services.
HVS also has specialists in parking operations, golf courses,
and convention centers.
Since 1980, HVS International has performed more than 15,000
assignments throughout the world for virtually every major industry
participant. Its 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.
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 three 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. As entrepreneurial educators, administrators and faculty
are experienced in the profession and bring the reality of the
industry into the classroom. The Tisch Centers motto encapsulates
its uniqueness - The City is our laboratory, the industry is
our faculty, and our students are the future of the profession.
New York University Annual International Hospitality Investment
Conference
For 24 years, HVS International has played an integral role
in New York University's Annual International Hospitality Industry
Investment Conference. Once again, our team of professionals
looks forward to welcoming you to this prestigious event, which
is scheduled for Sunday Tuesday, June 4 - 6, 2006, at
the New York Marriott Marquis.
Acknowledgements
Randy Smith of Smith
Travel Research has provided the Survey's comprehensive
hotel statistics of Manhattan. Smith Travel Research continues
to be the leading source of hospitality industry operating statistics.
We would also like to thank Joseph E. Spinnato and Rick Amatto
of the Hotel Association of New York City, as well as Kathie
Stapleton, Thomas J. Travers, and Donna Quadri-Felitti of HSMAI
Big Apple Chapter for their assistance. Additionally, in cooperation
with New York University, the data-gathering process was largely
a contribution of six graduate students, Suzyette Coleto, Shani
Duplessy, Taneika Grant, Ana Mota, Wendy Saudjana, and Passang
Tsering, through the coordination of Dr.
Mark M. Warner, Director of Graduate Programs. HVS
International is pleased to have been a part of this enriching
educational process.
HVS International would also like to thank its own Roland
de Milleret, Senior Vice President; Gisle
Sarheim, Senior Associate; and Gabi
Baumann, Consulting and Valuation Analyst, for their invaluable
contribution and dedication to this project.