HVS Hospitality Services has compiled data provided by Smith Travel Research to illustrate the effects of the current state of the economy on different classes of hotels in Manhattan. The following tables compare the performance of all reporting hotels in Manhattan using year-end figures from 2000 through 2006; results are classified by market segment: luxury, full service, limited service, and boutique. The following graph presents the annual percentage change in RevPAR for all four segments since 2001.

Luxury

Year	Average Daily Room Count	% Change	Occupied Room Nights	% Change	Occupancy	% Change	Average Rate ($)	% Change	RevPAR ($)	% Change
2000	8,451	-	2,496,170	-	80.9	-	370.45	-	299.79	-
2001	8,350	(1.2)	2,141,877	(14.2)	70.3	(13.2)	329.31	(11.1)	231.43	(22.8)
2002	8,867	6.2	2,339,607	9.2	72.3	2.9	315.83	(4.1)	228.31	(1.3)
2003	8,979	1.3	2,415,762	3.3	73.7	2.0	308.54	(2.3)	227.42	(0.4)
2004	8,951	(0.3)	2,602,476	7.7	79.7	8.1	341.85	10.8	272.32	19.7
2005	8,066	(9.9)	2,429,413	(6.6)	82.5	3.6	401.55	17.5	331.34	21.7
2006	7,717	(4.3)	2,203,895	(9.3)	78.2	(5.2)	461.35	14.9	360.96	8.9
Average Annual Compounded Change: 2000-2006		(1.5)		(2.1)		(0.6)		3.7		3.1

Source: Smith Travel Research

As a result of the closing of several luxury hotels for conversion to condominiums, supply within the luxury segment decreased by nearly 14% between 2004 and 2006. As a result, a large portion of demand previously accommodated at luxury hotels was forced to seek accommodation outside this segment, which caused occupancy to decline by 5.2% in 2006. However, the compression within the luxury segment, together with a healthy national and regional economy, has allowed hotel operators to increase rates aggressively each year since 2004. Thus, average rate within the luxury segment has increased by 49.5% since 2003, peaking at a stellar $461.35 in 2006. RevPAR recorded double-digit increases of around 20% in 2004 and 2005, and a lower but still significant increase of 8.9% in 2006, moderated by the decline in accommodated room nights.

Full Service

Year	Average Daily Room Count	% Change	Occupied Room Nights	% Change	Occupancy	% Change	Average Rate ($)	% Change	RevPAR ($)	% Change
2000	27,981	-	8,554,710	-	84.0	-	210.42	-	176.82	-
2001	27,920	0.1	7,719,105	(9.8)	75.7	(9.9)	186.74	(11.3)	141.45	(20.0)
2002	27,956	0.1	7,800,386	1.1	76.4	0.9	174.47	(6.6)	133.37	(5.7)
2003	29,047	3.9	8,147,073	4.4	76.8	0.5	168.72	(3.3)	129.65	(2.8)
2004	28,394	(2.2)	8,708,842	6.9	84.0	9.4	187.92	11.4	157.91	21.8
2005	28,515	0.4	9,008,545	3.4	86.6	3.0	222.35	18.3	192.46	21.9
2006	27,944	(2.0)	8,916,203	(1.0)	87.4	1.0	253.34	13.9	221.46	15.1
Average Annual Compounded Change: 2000-2006		0.0		0.7		0.7		3.1		3.8

Source: Smith Travel Research

Demand for full-service accommodation declined in 2006 for the first time since 2001. This trend, however, was somewhat offset by a decrease in supply within the full-service segment, which was also a result of certain hotels being converted to condominium developments. As a result, occupancy remained fairly stable in 2006. We note, however, that because occupancy levels are in the high 80s, increases in occupancy are somewhat restricted by capacity constraints, as most hotels currently operate at near-maximum- capacity levels. The continued compression in the full-service segment enabled hotel operators to push rates aggressively, causing 2006 to record another double-digit increase in average rate, of nearly 14%, to over $250.00. Average rate within the full-service segment has increased by nearly $85.00 since its previous low-point in 2003, an increase of over 50%. As a result, RevPAR recorded another double-digit increase in 2006, of 15.1%, continuing the positive trend registered in 2004 and 2005.

Limited Service

Year	Average Daily Room Count	% Change	Occupied Room Nights	% Change	Occupancy	% Change	Average Rate ($)	% Change	RevPAR ($)	% Change
2000	4,636	-	1,503,042	-	88.8	-	156.63	-	139.12	-
2001	4,758	2.6	1,381,079	(8.1)	79.5	(10.5)	136.40	(12.9)	108.47	(22.0)
2002	4,923	3.5	1,408,682	2.0	78.4	(1.4)	124.84	(8.5)	97.86	(9.8)
2003	5,001	1.6	1,420,876	0.9	77.8	(0.7)	123.03	(1.5)	95.77	(2.1)
2004	5,099	2.0	1,631,763	14.8	87.7	12.6	142.20	15.6	124.67	30.2
2005	5,283	3.6	1,695,436	3.9	87.9	0.3	177.08	24.5	155.68	24.9
2006	5,631	6.6	1,813,384	7.0	88.2	0.4	198.71	12.2	175.32	12.6
Average Annual Compounded Change: 2000-2006		3.3		3.2		(0.1)		4.0		3.9

Source: Smith Travel Research

The limited-service segment was the fastest-growing category in Manhattan in 2006, with unparalleled demand growth of 7.0%. This increase in demand was nearly matched by supply growth of limited-service products. As a result, occupancy within the limited-service segment remained fairly stable in 2006, at 88.2%. The high occupancy level also suggests a noteworthy amount of unaccommodated demand for limited-service lodging, which is expected to be accommodated by the vast number of limited-service hotels proposed for the city in the future. Continuing the positive trend observed in 2004 and 2005, average rate registered another healthy increase, of 12.2%, rising to almost $200.00 in 2006, causing RevPAR to register a double-digit increase in this segment as well.

Boutique

Year	Average Daily Room Count	% Change	Occupied Room Nights	% Change	Occupancy	% Change	Average Rate ($)	% Change	RevPAR ($)	% Change
2000	5,626	-	1,644,801	-	80.1	-	252.68	-	202.40	-
2001	7,159	27.3	1,796,009	9.2	68.7	(14.2)	214.61	(15.1)	147.50	(27.1)
2002	7,637	6.7	2,018,616	12.4	72.4	5.4	206.96	(3.6)	149.88	1.6
2003	7,623	(0.2)	2,062,373	2.2	74.1	2.4	207.66	0.3	153.93	2.7
2004	7,831	2.7	2,249,698	9.1	78.7	6.2	234.84	13.1	184.84	20.1
2005	7,986	2.0	2,400,827	6.7	82.4	4.6	272.60	16.1	224.52	21.5
2006	7,852	(1.7)	2,413,523	0.5	84.2	2.2	304.63	11.7	256.54	14.3
Average Annual Compounded Change: 2000-2006		5.7		6.6		0.8		3.2		4.0

Source: Smith Travel Research

The supply of boutique rooms declined slightly in 2006, causing occupancy to increase to the mid-80s. Average rate continued to grow at an impressive rate in 2006, experiencing a double-digit increase of 11.7%, to over $300.00. As a result of the strong average rate increase and minimal occupancy growth, RevPAR improved by 14.3% in 2006.

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