Depsite swath of luxe new openings, NYC’s hotel industry isn’t out of hot water, experts say

New York City hotels are thriving. They’re besides successful crisis. It each depends connected what metrics you trust connected —but it’s adjacent to opportunity that some statements are true.

The Big Apple’s edifice manufacture astatine first glimpse seems to person mounted a stirring comeback from nan pandemic. A person look shows that contempt important improvements successful occupancy, room rates and revPAR (revenue per disposable room, nan industry’s gold-standard metric), nan benchmarks of edifice capacity still autumn short. Hotel Association of New York president and CEO Vijay Dandapani said unequivocally: “The marketplace did not retrieve arsenic compared to 2019.”

But nan longer-term outlook for owners — if not for visitors — is bright, analysts say, arsenic metropolis restrictions connected caller edifice building severely limit nan creation of caller impermanent rooms.

Time Square is teeming pinch openings for illustration nan Hard Rock Hotel. J. Messerschmidt/NY Post

“The demand-supply imbalance will beryllium very favorable to owners,” said Kevin Davis, CEO of JLL’s Hotels and Hospitality Group for nan Americas.

“The New York City edifice marketplace is poised for a tremendous tally complete nan adjacent 5 to 7 years,” Davis said — owed successful portion to “the deficiency of caller supply.”

That there’s a scarcity mightiness astonishment visitors and New Yorkers alike who spot throngs coming and going from caller properties clustered adjacent Times Square — Tempo by Hilton, nan Hard Rock, Hampton Inn, Home 2 Suites, Motto and nan astir vanished Voco by IHG. Or astatine nan gleaming caller Ritz-Carlton Nomad and Virgin hotels connected Broadway successful nan 20s.

Other caller hotels for illustration nan Ritz-Carlton Nomad adhd luster to nan city. Courtesy of The Ritz-Carlton

Many different indicators look superficially encouraging to edifice owners and guidance companies. More than 62 cardinal group visited nan metropolis successful 2023, astir arsenic galore arsenic successful 2019. McKinsey & Co. forecasts that 2025 will spot much visitors and business travelers than earlier nan pandemic.

Investment-sale values person held up. Gencom precocious paid a patient $308 cardinal for nan Thompson Central Park connected West 56th Street. The 610-room Park Lane Hotel was sold to nan Qatar Investment Authority for $623 million, aliases astir $1 cardinal a room, successful 2023.

Everyone looks guardant to nan reopening of Ty Warner’s Four Seasons Hotel connected East 57th Street adjacent period aft 3 acheronian years and— possibly — nan reopening of nan Waldorf-Astoria aft 8 years.

But appearances tin beryllium deceiving. Davis pointed retired that nan caller projects each started earlier nan City Council passed authorities successful 2021 to require each planned caller task to get a typical licence taxable to nan Council’s whims. Since then, nan Hotel Association’s Danjapani said, only 5 caller proposals were submitted and only 1 approved.

“It’s a two- to three-year process to get a permit, and past you person to facet successful different 2 aliases 3 years to build,” Davis noted.

Danjapani said nan truth that occupancy is still 4% down 2019, while revPAR is 20% lower, contempt caller gains, is disappointing fixed that nan metropolis has betwixt 13,000-19,000 less rooms than earlier astatine astir 150 different properties.

That’s owed successful portion to Mayor Eric Adams’ deals to location migrants — astir visibly astatine Midtown’s Roosevelt Hotel. The turnover to migrant usage contributed heavy to a nett 6,000-room nonaccomplishment since 2019 arsenic caller openings didn’t afloat offset nan reductions, which included nan 2020 closing of nan 2,200-room Pennsylvania. Still, nan metropolis has astatine slightest 120,000 impermanent rooms, much than half of them successful Manhattan.

Even nan improvements successful nan value metrics show signs of slowing down. PWC said 2Q RevPAR, for example, accrued 6.8% from nan aforesaid play successful 2023 — but nan measures “while robust, continued to decelerate.” The strongest betterment successful RevPAR was successful luxury properties.

Another unreality complete nan manufacture is nan Council’s connection to create caller licensing requirements — which Dandapani’s statement first termed a “nuclear bomb” but supported aft nan original measure was modified (other manufacture groups still reason nan bill).

“We’ll spot what nan last measure says,” Davis said.

Whatever nan early holds, it’s a useful to retrieve that nan city’s room inventory was erstwhile overmuch smaller than it is today. The city’s impermanent room banal fell to conscionable 72,000 successful 2007. A building roar gradually raised nan full to historical highs. Nobody tin foretell what nan early holds pinch astir doubly arsenic galore rooms successful play. But if history’s immoderate guide, nan marketplace will yet regain its equilibrium. The only mobility is when.