While hotels throughout the city sold out during Hurricane Sandy, the overall hospitality industry is suffering from the storm — and that stands to negatively impact new commercial development.
According to Bloomberg News, U.S. revenue per available room, an industry measure of occupancy and rates, is now expected to grow 5 percent to 5.5 percent in the fourth quarter. Prior to the storm, industry analysts had been expecting revenue to grow 6 percent, Nikhil Bhalla, a senior lodging analyst at Virginia-based FBR & Co., told Bloomberg.
Growth was “generally soft through the first three weeks of the month,” before Sandy hit, Bhalla said. “So I expect results for the last week of October to be notably soft.”
Companies with large portfolios in the Northeast — Starwood Hotels & Resorts Worldwide; the real estate investment trust Host Hotels & Resorts, owner of the Westin New York Grand Central; and Hilton Times Square landlord Sunstone Hotel Investors, among them — are expected to suffer the most from storm damage or lost revenue.
Hotels in New York, Boston and Washington account for approximately 10 percent to 12 percent of all U.S. lodging revenue, meaning property damage and lost revenue caused by Sandy could have a ripple effect on commercial property across the nation. [Bloomberg] —Christopher Cameron