Major Market Meltdown
While drive-to leisure markets are at widely expected to lead any potential lodging industry recovery, major urban markets throughout the country continue to struggle mightily as travelers generally look to avoid densely populated areas in the wake of the Coronavirus pandemic.
There’s no better example of the current plight of major markets than New York City, which has seen a substantial falloff in all the industry metrics after enjoying nearly of decade of unprecedented demand and growth. In addition, recent civil unrest and uncertainty about levels of protection from police have also emerged.
According to STR’s Hotel Review for May, New York saw occupancy plummet to 47.2% percent for the month versus 89.3% last ear. Meanwhile, ADR for Manhattan during May came in at $126.60 and RevPAR was $59.77 compared to $277.70 and $248.01, respectively during May 2019.
A look at year-to-date figures for the city further drives homes the point as occupancy comes in at 54.9% thus far for 2020 in comparison to 82.0% in 2019. In terms of ADR and RevPAR, 2020 has been pegged at $165.65 and $90.95 compared to $227.31 and $186.29, respectively.
In a virtual panel last week entitled “Bracing For A Boom In Receivership,” part of IMN’s Distressed Hotel Insights series, a couple of hotel owner/operators which have properties in receivership expressed some real concern about the market.
John Hamilton, SVP, acquisition & business development, Pyramid Hotel Group, painted a bleak picture. “New York City is a mess and it’s going to be a mess for some time. It was struggling with an oversupply issue, unions are difficult there, it was the center of the virus and now it looks like now you’re not going to have any police protection when you’re there. So that’s a heck of a place to visit. So we think the hotels that are there are going to be in trouble. A lot of them aren’t going to come back, they’re going to become residential,” he said.
Douglas Wilson, Chairman and CEO, Douglas Wilson Companies, reinforced the point. “From our standpoint New York may be the epicenter of a lot of issues. There’s certainly going to be ample opportunities elsewhere,” he said.
Meanwhile, according to STR, during May occupancy for the top 25 U.S. markets was 31.7% versus 75.6% last year. In all other markets those numbers were 33.7% and 65.3% respectively. ADR among the top 25 markets was $83.88 in May compared to $162.08, while RevPAR was $26.60 versus $122.59 in 2019.
A closer look at other major markets further illustrates the falloff. San Francisco, for example, experienced 27.1% occupancy in May versus 84.0% last year, while RevPAR plummeted to $28.17 from $205.79. In Boston, 2020 occupancy for May reached 22.5% compared to 81.3% in 2019, while RevPAR was $89.73 versus $226.65. In Washington, DC, occupancy came in at 25.8% versus 80.4% in 2019, while RevPAR was only $22.31 in comparison to $143.64 in 2019.