Manhattan Hotel Market Overview
HVS Hospitality Services, in cooperation with New York
University's Preston Robert Tisch Center for Hospitality,
Tourism, and Sports Management, is pleased to present the tenth
annual Manhattan Hotel Market Overview.
Stephen
Rushmore
President & Founder, HVS
Hospitality Services
For 2006, New York City can once again boast of
its status as the Number One U.S. market in terms of RevPAR! While
the occupancy level for Manhattan hotels remained fairly stable,
at 85%, for 2006, average rate continued to record double-digit
increases month after month, ending the year 13.4% over the previous
year. Though rate gains were more modest than those of 2005, they
continued to soar in selected segments and locations, including
hotels in the Times Square area as well as Midtown luxury properties.
With occupancy levels close to maximum capacity,
it would be anticipated that the sky is the limit in terms of average
rate; however, hoteliers are experiencing increased rate resistance,
particularly from the commercial, and meeting and group segments.
Thus, rate gains in the near term are expected to moderate, while
still remaining quite healthy. As the housing boom continues to
be sluggish, developers are re-evaluating residential projects and
contemplating hotel projects, resulting in a multitude of new players
on the Manhattan hotel scene. Included in this mix are out-of-state
and foreign developers eager to invest in New York City, which has
resulted in the largest-ever construction pipeline in Manhattan.
Activity is particularly strong in Chelsea and Downtown Manhattan,
and the World Trade Center site redevelopment is expected to result
in strong future demand gains. Considering the current climate,
HVS forecasts a soft landing for the Manhattan market, with minor
declines in occupancy and softer average rate growth in the near
term. Manhattan hotel values set a new record in 2006, exceeding
the $1 million mark per key. Istithmar purchased the W Union Square
for roundly $1.1 million per room in October 2006, and acquired
an interest in the Mandarin Oriental for roundly $1.4 million per
key in February 2007. In 2006, values increased from 20% to 30%
compared to 2005 levels. Overall, we anticipate Manhattan hotel
values to level off by the end of 2007.
A
slight uptick in Manhattan�s occupancy level in 2006 led to a
record high of 85.0%. Despite a virtually stable occupancy, the
Manhattan lodging market registered a 13.4% increase in RevPAR
compared to 2005, continuing its impressive performance. The
market�s RevPAR gain was supported by double-digit growth in
average rate each month of the year, with the exception of
December, causing year-end 2006 average rate to exceed the 2005
level by 13.2%. The high rates registered by the Manhattan
lodging market were caused primarily by continued strong demand
levels in 2006, allowing hotel operators to be more selective
with lower-rated demand and increasingly boost rates, thereby
accommodating greater numbers of higher-rated travelers. We note
that the market�s overall occupancy level of 85.0% in 2006
highlights the underlying strength of the Manhattan market,
which continued to operate at near-maximum-capacity levels.
Because of a further decline in supply in 2006, the market
continued to experience many sell-out nights, causing a
significant amount of demand to remain unaccommodated. Given the
larger-than-ever construction pipeline in Manhattan, a
substantial portion of previously unaccommodated demand is
expected to be accommodated in the future. Manhattan�s
marketwide occupancy and average rate both achieved new record
levels in 2006, and we expect the positive trend to continue in
2007.
HVS
Hospitality Services
HVS
Hospitality Services is a global services and consulting
organization focused on the hotel, restaurant, shared ownership,
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 more than 20 offices staffed by more than
200 seasoned industry professionals, HVS offers a wide scope of
services that track the development and 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 and marketing, HVS offers these
services as well. 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 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.
New
York University�s Preston Robert Tisch Center for Hospitality,
Tourism, and Sports Management
NYU's Preston Robert Tisch Center for Hospitality, Tourism, and Sports
Management, part of the School of Continuing and Professional Studies, offers undergraduate, graduate, and other academic programs that aim to develop professionals with in-depth industry knowledge and the critical thinking skills necessary for leadership roles in the fields of hospitality, tourism, and sports management. The Center�s full-time and adjunct faculty is composed of leading practitioners and researchers. Its board of advisors includes senior executives who advise on curricula development and help ensure that coursework reflects the latest industry trends and needs. The Tisch Center�s location in the heart of New York City�one of the world�s premier tourist and sports destinations�provides its students with multiple internship and networking opportunities, as well as the chance to study at several on-site �industry classrooms� at such venues as The New York Marriott Marquis, The Waldorf=Astoria, Chelsea Piers, and the NBA Store.
New
York University International Hospitality Industry Investment
Conference
For
25 years, HVS Hospitality Services has played an integral role
in the New York University 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 through Tuesday, June 3 to June 5, 2007,
at the New York Marriott Marquis.
Acknowledgements
Randy Smith of
Smith Travel Research has provided the report�s
comprehensive hotel statistics for Manhattan. Smith Travel
Research continues to be the leading source of hospitality
industry operating statistics. We would also like to thank Mayor
Michael R. Bloomberg, Jonathan M. Tisch of Loews Hotels and NYC
& Company, George Fertitta of NYC & Company, Mark V. Lomanno of
Smith Travel Research, Joseph E. Spinnato of the Hotel
Association of New York City, Dr. Lalia Rach of NYU�s Preston
Robert Tisch Center, 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 four graduate students � Laura Alejandra Aybar,
Byungmin Chae, Gustavo Martinez, and Efren Salvador � through
the coordination of
Dr. Mark M. Warner, Director of Graduate Programs.
HVS Hospitality Services is pleased to have been a part of this
enriching educational process.
HVS
Hospitality Services would also like to thank its own
Roland de Milleret, Senior Vice President;
Gabi Baumann, Senior Associate; and
Gisle Sarheim, Vice President, for their invaluable
contribution and dedication to this project.
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