As the global economic crisis deepens, fewer tourists are visiting New York, prompting hotel and tourism officials to focus on “value” for thrifty travelers this year.
At the end of last year, hotel occupancy levels in New York City showed the start of what is expected to be a dramatic softening, following banner growth during the prior six years.
In the fourth quarter, occupancy levels plunged 9.9 percent from 2007 levels to around 77 percent, estimated as of press time, according to John Fox, senior vice president at PKF Consulting. Average room rates plummeted 7 percent, to yield a 16.1 percent revenue decrease. For the full year, occupancy levels declined an estimated 2.3 percent from 2007, to 81.7 percent, according to PKF.
“It’s been pretty significant in all sectors,” said Fox, referring to the decline. “Business, tourists domestic and international — all sectors have seen a big drop-off.”
The grim numbers run counter to Mayor Michael Bloomberg’s aggressive growth plans for tourism. Just last June, Bloomberg was so optimistic about the city’s ability to lure overseas tourists that he revised his timeline for reaching 50 million visitors a year to 2012 from 2015.
Optimism was blooming in 2007, when roughly 46 million tourists traveled to New York City, spending a whopping $28.9 billion. The tally included 8.8 million international visitors, and while they made up just 19 percent of the travelers, they brought in more than half the money, some $15 billion in economic activity.
In general, international tourists are the most highly coveted sector of the tourism market because they stay longer and spend more than other travelers. New York City’s 8.8 million international visitors in 2007 represented a 21 percent increase from the year before and capped off four years of booming growth.
Now, however, Britain and Spain, which helped drive those tourism boosts, are reeling from the global recession.
To keep tourist dollars flowing in 2009, NYC & Co., the city’s official tourism and marketing arm, is focusing on new groups of tourists, both foreign and domestic. The city has opened offices in 11 countries since March 2007 — for a total of 18 international offices serving 25 markets — as a bulwark against declines from any one country.
Now city officials, along with others in the tourism and hotel industry here, say “value” is the new watchword.
Just a few months ago, promoters were marketing the weak dollar as a selling point for European and other foreign tourists. But the U.S. currency’s recent strengthening has forced many to rejigger their marketing message to lure tourists to New York City.
“Our fundamental tactic reverted several months ago to promoting the unique aspects of the city, and to highlighting the ‘value’ in terms of the experience, rather than ‘value’ in monetary terms,” said Chris Heywood, vice president of travel and tourism public relations for NYC & Co.
New York City-based HK Hotels is using the Web to promote “value” via perks like free bottled water, which many hotels charge for. The company, which operates four Manhattan hotels, logged guest gains of 10 to 20 percent at its New York hotels through October, though it had forecast numbers for November and December to be flat.
“I believe people still want to come,” said Adele Gutman, vice president of sales and marketing for HK Hotels, which operates the Library, the Casablanca, Hotel Giraffe and Hotel Elysée.
Meanwhile, NYC & Co. is now courting South Koreans from a new office in Seoul and plans to launch an online academy to train Korean travel agents and tour operators in how to package and sell the five boroughs as destinations.
But as a result of the economic crunch, the tourists who do come to New York will find fewer new hotels. Developers were planning 11,000 new hotel rooms for the next two years. But with the economic downturn, that number was revised to about 8,000 rooms with the remainder likely to be scuttled or postponed, according a recent report in the New York Times.
Even with the scuttled rooms, the city still has a lot of new hotel space coming online, as industry insiders bank on New York remaining a hotter destination than any other American city.
Despite the recent declines and gloomy outlook — PKF expects full-year 2009 occupancy levels to decline 9.3 percent from 2008 — New York’s occupancy levels are still far above 2007’s national average occupancy rates, which were in the low 60s.
Some of the new marketing efforts to attract those visitors will be online.
Late last month NYC & Co., allocating some of its $15 million in additional annual funding from the mayor, launched a new Web site, NYCGo.com, as well as a renovated visitor information center at 810 Seventh Avenue. (That center has information for New Yorkers, too, to help cash-strapped residents enjoy the city’s attractions if they can’t afford vacations elsewhere.)
And, to attract customers from far-flung locations, HK Hotels just shelled out some $75,000 on spiffy new Web sites for its four hotels and corporate brand, launching them over the last few months. HK Hotels is also using the Web to emphasize package deals and freebies such as breakfast in its lobbies.
“If we provide more service and more value than ever, that is the key,” said Gutman.