NYC nightly hotel rates are falling

Only one of top 25 markets to see a year-over-year decrease
July 30, 2015 09:15AM

Despite having the highest hotel occupancy rate in the country and hosting a record number of tourists last year, New York City hotels are actually slightly less expensive than they were during the same period a year ago.

Average nightly hotel rates fell 1.5 percent during the second quarter of 2015, to $269, compared to the same quarter last year. Among 25 markets, New York was the only city to see a decrease, the New York Post reported, citing data from hotel research firm STR.

Hotel occupancy rates in New York City are at 89 percent — higher than in other top markets like Atlanta, San Francisco and Orlando. In San Francisco, for example, the occupancy rate is 87.5 percent and room rates grew 9 percent year-over-year to $219.

“It doesn’t make sense that hotel rooms are full in New York and rates are down,” said STR’s senior vice president, Jan Freitag. “The hotels don’t have pricing power.”

Factors contributing to the drop in price could be the growth of Airbnb and an influx of new hotel rooms. Currently, about 14,000 new hotel rooms are slated to be added to the city’s stock of 105,000 rooms. By 2016, over 110,000 rooms will be in operation — an all-time high.

In the first quarter, New York City rates were down 4.1 percent to an average of $204. [NYP] — Tess Hofmann