Manhattan hotel revenue dips for the 4th straight winter to $164 per room
Industry experts believe RevPar will begin growing some time next year
The coldest winter Manhattan’s hotel market ever saw … may have just passed.
The borough’s hoteliers saw revenue per available room – a widely used metric of the market’s health – dip to its lowest point of the current cycle as the hotel market struggles to absorb new supply.
The winter months, which are typically the slowest time of year for the city’s hotels, saw RevPar dip 2.3 percent year-over-year between January and March to about $163 a room, according to the hotel data-and-analytics firm STR.
That’s the lowest it’s been since RevPar began falling in the winter of 2014. The previous winter registered revenues of a little more than $180 per room.
The market’s been struggling as hoteliers drop nightly rates in order to compete with thousands of new hotel rooms, particularly in lower-priced select-service hotels.
Manhattan is expected to add more than 4,500 new rooms in 2017, with fewer coming online in the years following through 2020.
“I think most people in the industry are thinking that, for the year as a whole, we’ll start to see positive RevPar growth in Manhattan in 2018,” said Bradley Burwell, a vice president in the hotels group at CBRE.
Burwell added that the exact timing for the turnaround – whether it comes in the first or second half of the year – will depend on when the new rooms come online.
“All these hotels, when they open up they have a period of time when they’re offering discounts or lower rates to attract customers,” he added. “As all those hotel rooms get absorbed, we’re going to see rates stabilize and then eventually start to increase.”
The number of hotel-room-nights sold during the quarter increased 4.4 percent to 6.8 million, while supply grew by a little bit more than 4 percent to 8.6 million. Occupancy crept up slightly to 78.5 percent, and average daily rates dropped 2.6 percent to about $208 per night, STR data show.
The select-service hotels, in particular, are more inclined to keeping their properties with higher occupancies at the expense of cutting room rates.
Winter 2017 was probably negatively impacted by the timing of the Easter holiday, which occurred in March last year but falls during the second quarter this year in April. Tighter regulations on Airbnb implemented in October could also give 2018 a boost if there are fewer home-sharing listings to compete with hotel rooms.