In 2007, Manhattan was once again the Number One U.S. lodging market in terms of RevPAR performance. For the fourth consecutive year, RevPAR recorded double-digit growth in 2007, climbing 14.3%, indicative of the continued strength of the Manhattan lodging market. At roundly 87%, occupancy reached its highest level since 1987. This high occupancy also suggests a significant amount of unaccommodated demand in Manhattan, which is expected to be accommodated by the vast number of new hotels proposed for the city in the next three to four years. 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. In 2007, the volume of hotel sales in Manhattan soared to over $2.0 billion, excluding the sale of the Hilton New York and the Waldorf=Astoria as part of the Hilton acquisition by Blackstone. This volume was driven by the emergence of overseas players such as Istithmar Hotels, which set a new record through the transfer of interest in the Mandarin Oriental for roundly $1.4 million per key in February 2007. Overall, we anticipate that overseas hotel companies will capitalize on the weak dollar to further establish or expand their presence in the U.S., causing hotel values to remain strong.

Dear Friends:

It is a pleasure to welcome everyone to the 30th Annual New York University International Hospitality Industry Investment Conference. Three decades after this event’s establishment, business and leisure travelers are flocking to the five boroughs like never before. In fact, an estimated 46 million visitors, including 8.5 million international visitors, came here last year — a new record!

It’s no wonder that millions of people are enjoying the rich diversity of our cosmopolitan City. New York accommodations, attractions, dining, entertainment, shopping, sporting events, theater and performing arts are the best in the world. From first-time visitors just discovering the Empire State Building and Broadway to seasoned veterans exploring more of our diverse, exciting neighborhoods, our City presents endless possibilities.

There’s never been a better time to visit the greatest City on earth, and with the help of those gathered here today, I know that we can meet our ambitious goal of drawing 50 million visitors per year by 2015. Please accept my best wishes for an enjoyable and productive conference.

While we are entering more uncertain times, New York City is coming out of another record year for travel and tourism. In 2007, 46 million people visited the city, spending nearly $28 billion. New York was also the only major city in the United States to increase its overseas travelers. And with New York’s concerted focus on international travelers, including an innovative marketing campaign and travel offices across the globe, we believe we can remain strong even as the economy softens.

We began this year with a strategic plan to grow tourism—in particular in key international markets—and the record 46 million visitors we welcomed in 2007 show that our hard work is taking real effect. By capitalizing on beneficial exchange rates, expanding our international network and launching the global communications campaign “This is New York City” to promote the City, we have not only raised awareness of the excitement of the five-borough experience, but also inspired potential visitors to act on their interest and make a visit to New York City a reality.

Manhattan’s hotel industry soared once again in 2007, turning in a remarkable performance. International visitors were drawn to our City, enjoying its cultural attractions and theatrical performances, filling its restaurants and hotels, and heightening the cosmopolitan ambience of the retail centers and sidewalks of New York.

Throughout 2007, New York hotels continued to experience very strong operating performance. With annual occupancies reaching over 83 percent, hoteliers were able to maintain strong room rate growth, resulting in a 4th consecutive year of double digit RevPAR growth. In both of the key measures of ADR and RevPAR, New York hotels reported the highest levels of any U.S. city during 2007. This performance was even more dramatic when considering recent supply additions and a very sluggish U.S. economy in the second half of the year. It seems that for the present time, at least, NYC hotels have not felt the effect of the economic malaise as occupancy and room rate performance has remained very strong in the early stages of 2008. While this seems unlikely to continue throughout the year, it clearly demonstrates the robust nature of the City's lodging environment.

Hotels in NYC have clearly benefited from the lack of new room supply over the past several years, which has enabled them to maintain a very aggressive pricing strategy. This may change in the next several years as over 11,000 new rooms are currently in construction in the city. If all are completed, this will raise the existing supply base by about 7 percent. While these new rooms are certainly necessary, they may come on line during a weak economic environment, which may slow overall market performance toward the end of 2008. However, with NY being such a desired destination, we expect hoteliers to sustain pricing integrity, which will serve them well in the coming years.