Big Apple Bounces Back
Second-Half Growth Expected For NYC With International COVID Restrictions Lifted
The struggles of urban markets since the pandemic have been well chronicled with many of the top 25 MSAs in the U.S. experiencing a sharp drop-off in occupancy and RevPAR.
As Tom Luersen, president, CoralTree Hospitality, recently said during a panel discussion at BITAC Independent, “some of the urban markets in the northeast, Chicago, New York and others have been slower to recover.”
Nevertheless, Luersen was bullish on the future of these markets as business travel continues to return.
“I think you’re going to see some markets continue to evolve and others that are going to slow down. Resorts are going to definitely slow down in my opinion because they’ve been on such a high and the urban markets are going to come back as the office markets come back,” he said.
At least one major market, New York, seems to be showing signs of life. Granted some of the comparisons need to be take in context because the numbers were so far below par, there was significant improvement in the first two quarters.
Increases in occupancy, ADR and RevPAR continued to accelerate across Manhattan during the first half of the year, according to PwC’s Manhattan Lodging Index Q2 2022 report. Q2 RevPAR experienced a year-over-year increase of 166.8%, with the strongest gains in April, which experienced a year-over-year (YOY) increase of 220.4%. Q1 RevPAR was also up 135.7% from the same period in 2021.
“Manhattan hotels are finally experiencing a sustaining recovery,” said Warren Marr, managing director, PwC in a press release. “While RevPAR was still down 11.7% in 1H 2022 from the same period in 2019, it was a significant improvement from a year ago, when RevPAR during 1H was down 57.2% from the same period in 2019. The lifting of COVID-19 pre-departure testing is expected to positively impact inbound international travel for the second half of this year in Manhattan.”
Q2 occupancy and ADR surged as both group and summer leisure travel began to re-emerge and pandemic-related travel restrictions were softened. YOY increases in occupancy were highest in April—up 70.3%. With overall occupancy for the quarter at 81.3% and ADR at $314.54, Manhattan RevPAR more than doubled from $95.81 in Q2 2021 to $255.61 in Q2.
Of the five Manhattan neighborhoods, Midtown East had the largest increase in RevPAR, up 234.4%, driven in large part by a 92.4% increase in occupancy YOY. Midtown West RevPAR grew by 193.0%, largely driven by an 82.6% increase in ADR. Lower Manhattan and Midtown South posted RevPAR increases of 147.1% and 162.7%, respectively. Upper Manhattan had the smallest increase in RevPAR, still up a significant 90.4%.
During the second quarter, occupancy at full-service hotels increased at almost twice the rate of limited-service hotels, with YOY increases in occupancy of 63.4% and 34.3%, respectively. RevPAR increased 171.9% for full-service properties, while limited-service hotels saw an increase of 141.8% over the same period.
For chain-affiliated and independent hotels, second-quarter RevPAR grew by 180.9% and 144.3%, respectively. The improvement in chain-affiliated hotels was primarily driven by a stronger increase in ADR, up 83.1%.