A guest room in the Whitby Hotel , Firmdale ' s newly opened second hotel in New York City
TOTAL 192 projects / 30,541 rooms 101 projects under construction 63 scheduled to start in 2017 28 in early planning
OPENING 2017 : 64 2018 : 39 2019 or later : 89
Source : Lodging Econometrics
Photo : Simon Brown
NYC CONSTRUCTION
PIPELINE visitors is expected to rise , that won ’ t offset the loss of foreign spending , since overseas visitors spend about US $ 2,000 in the city , compared with US $ 500 for U . S . tourists .
Michelle Russo , president of asset management firm hotelAVE , says New York hotels are feeling the sting . “ Year to date , our New York hotels are seeing declines from Singapore , Hong Kong , Germany , Japan and the United Kingdom ,” she says . Through May , she anticipates declines from France , Spain and Switzerland , adding that she doesn ’ t expects a rate recovery until 2019 or 2020 .
In addition , the estimated 40,000 rooms offered by Airbnb and other sharing sites has made it difficult for established hotels to raise rates , says Vijay Dandapani , CEO of the Hotel Association of New York City and former president of Apple Core Hotels , who agrees that rates may not improve until 2019 . Even at peak demand times such as Pope Francis ' visit in September and events tied to the presidential inauguration , anticipated rate increases failed to materialize , Dandapani says . The supply overhang contributed to declines in average rates and RevPAR last year and in 2015 . Hersha Hospitality Trust forecasts that the average rate in Manhattan will fall by 0.7 % this year to US $ 276.54 but then rise nominally to US $ 280.41 in 2018 , a 1.4 % increase .
RevPAR is expected to fall by 0.8 % this year to US $ 239.62 but then increase the following year by 1.5 % to US $ 243.18 . However , that ’ s still some US $ 17 below the pre-recession peak , and it ’ s not expected to return to that level until 2020 , according to Hersha .
Analysts say projects added more recently to the pipeline could be canceled or converted to condos . With land prices rising , developers will turn to more lucrative office and residential projects , says Jeff Davis , a
TRAVELERS WHO WANT TO VISIT NEW YORK WILL COME .
KATHRIN APITZ , GM , WHITBY HOTEL
New York-based international director at real estate brokerage JLL . “ The highest and best use won ’ t be hotels ,” he says .
DEMAND IMPROVING Hotel managers say underlying demand is strong . November and December were the best months in several years , with RevPAR growth of 7.3 % and 5.5 % respectively , says Peter Majeski , manager , investor relations and finance at Hersha . Average daily rate grew 7 % in November and 4 % in December , he adds .
“ Travelers who want to visit New York will come ,” says Kathrin Apitz , general manager of the Firmdale ’ s newly opened boutique , the Whitby Hotel in Midtown , where the entry-level room is US $ 695 .
Morris Moinian , president of Fortuna Realty Group , which recently opened the first of two boutique hotels in Chelsea , says recent negativity “ supersedes reality .” However , he is encouraged by a crackdown on illegal listings on home-sharing sites . Since 2010 , it ’ has been illegal to rent space in New York City for less than 30 days without the owner present , but hosts often ignored the restrictions . The law passed by the state last fall makes it illegal to advertise sublets , which removed an obstacle to enforcement . However , he worries that this shadow supply will keep pressure on rates . Another ongoing concern : third-party websites that compare rates and “ push the floor lower ,” in spite of strong fundamentals .
JLL ’ s Davis points out that with most of the new supply to be delivered this year and early next year , metrics should start improving later in 2018 . Hennessey notes that the city is enjoying a spurt of commercial development , especially along the West Side , which can only boost demand : “ There ’ s a lot of economic momentum .”
May 2017 hotelsmag . com 11