The health of the city’s hotel industry is a mad-quilt pattern of mostly optimistic but confusing and conflicting cross-currents. Big new hotels keep opening while famous old ones close for good. Occupancy way up in 2021 but still below pre-Covid times.
Meanwhile, according to Vijay Dandapani, chief executive officer of the Hotels Association of New York City (HANYC), the key industry metric known as RevPAR, or revenue per available room, is welcome, but not as much as it should be.
They argue that the biggest obstacle to full-scale recovery is the hotel occupancy tax. A hefty 5.875% levy on each guest deters many people from coming here, especially event planners for large groups – “If you’re planning on coming to Madison Square Garden to watch NCAA basketball, for example,” Dandapani he said.
His organization is lobbying the city to reduce the tax to 2.875% for at least two years. In June of 2021, the city under former Mayor Bill de Blasio removed the tax entirely for only three months — “not enough to do much good,” Dandapani said.
The inn industry was once relatively simple to track, but the pandemic’s disruption and simultaneous boom in new openings and closures has made it as confusing as a subway map for first-time visitors.
Check out the new Virgin, Ritz-Carlton and Hard RockBeautiful additions in prominent places! But take your eyes off the dark Four Seasons on East 57th Street, hostage to an opaque dispute between owner Ty Warner and operator Four Seasons.
Also try to ignore the sorry spectacle of the Chinese-owned Waldorf-Astoria, as we reported this week, may not open before 2025,
Of a dozen up-market Manhattan hotels that closed after January 1, 2020, only three have firm plans to reopen, according to an analysis prepared for CBRE by Lodging Econometrics. They are the Uptown Four Seasons, the former Roger on Madison Avenue (to reopen as AKA Nomad in May), and the Surrey on East 76th Street, rebranded as The Surrey as a Corinthia Hotel (timing unknown) .
AKA Wall Street, the Marriott East Side, Roosevelt & Hudson is permanently closed. The list doesn’t even include the Waldorf-Astoria, which went dark in 2017, or the sprawling, low-rent Pennsylvania, which is being demolished.
The city is touting a significant increase in visitors – an estimated 61 million this year compared to 56 million in 2022, and close to a record 66 million in 2019. Restaurants and entertainment, since the country’s borders reopened.
Occupancy projected to be 75% in 2022, still below the pre-Covid average of 86%, but much higher than the bleak days of 2020 and 2021.
But Dandapani said the encouraging figures are misleading. Overall, he said, the Big Apple currently has about 118,000 open hotel rooms, down from 126,000 pre-pandemic — despite adding 6,000 newly constructed rooms over the past two years.
The theoretically “open” rooms include about 9,000 that are being used to house migrants who ended up in the city. They are counted as “occupiers”.
According to RevPAR, PwC’s Manhattan Lodging Index found it grew 54% year-over-year in the fourth quarter of 2022.
But Dandapani said that New York RevPars “are the cities that are the primary competitors for us.” In beleaguered Paris, from where Dandapani has just returned, for example, RevPAR in 2022 is up 15% compared to 2019, and in London by 7%. In New York City, RevPAR was still $4 lower on average than in 2019″—a drop from $219 to $215,” and this was not adjusted for inflation,” he said.
In addition, he said, Revpar’s recent growth primarily benefited the luxury-end of the market.
He attributed this to so-called “revenge” travel, which refers to travel demand by the wealthy stuck at home during the lockdown and border restrictions. “It is a fact that the rich got richer during the pandemic,” Dandapani said.