BisNow: The Travel Ban Is Lifting, But Big-City Hoteliers Still Expect Sluggish Return
By MIRIAM HALL
November 1, 2021
Multiple pandemic-era bans on international travelers coming to the United States are ending next week, but hoteliers in gateway markets aren’t predicting a major spike in bookings just yet.
“I think it’s just going to roll in slowly, I don’t think people are just gonna jump on a plane,” said Richard Born, whose BD Hotels owns more than 20 hotels in New York City. “Everybody’s been so stunned by what’s happening, everyone’s lives have been changed … There is enormous pent-up demand after a year and a half of being locked up, [but] I don’t see the reservations, and I just don’t mentally believe that all of a sudden, on Nov. 8, all of Europe and Asia is going to come to the United States.”
Starting next Nov. 8, vaccinated visitors from some 33 countries — including in the United Kingdom, China and most of Europe — will now be able to visit the U.S. following a nearly two-year ban. Many in hospitality had been railing against the ban, arguing the industry was being hurt while other countries were working harder to protect tourism.
Born, whose hotels include The Jane and The Bowery, said the past year has been a “horror show” for business, but said there have been big differences across the city in terms of how well the hotels are doing.
Downtown, he said, his hotels and restaurants are operating closer to normal, but in Midtown, occupancy and rates are down by 30% — equating to what he says is a 60% drop in revenue. International travel, he said, is about 25% of his portfolio’s business, and with the ban lifting, there is a glimmer of hope ahead.
“Just as we have seen incremental improvement over the last six months, due to the vaccine effect and domestic traveler being more comfortable, I think we’re gonna see the same slow creep with the foreign traveler,” he said.
International travelers make up 50% of hotel bookings and 50% of visitor spending in New York City, according to NYC & Co., the city’s tourism marketing arm. The city has the highest share of overseas travel in the country, per the organization. In 2022, international is expected to triple, going from a predicted 2.8 million international visitors in 2021 to 8.5 million next year.
But hotel rates have still not rebounded to pre-pandemic levels.
“It’s still, generally speaking, a struggle in New York, there’s no question about it,” LW Hospitality Advisors CEO Daniel Lesser said. “I wish I could say definitively that everybody is going to rush over … I was feeling very optimistic about a rapid rebound to quote-unquote normal, until [the] delta [variant] came around.”
At the Fitzpatrick Manhattan and The Fitzpatrick Grand Central, news of the travel ban lifting caused a spike in booking for December, said owner John Fitzpatrick, but nowhere near the levels they would have seen before the crisis.
People are still exercising caution, he said, and he believes steep increases in the cost of transatlantic flights could put people off. Right now, December bookings are about 75% of what they were in 2019, he said. But Fitzpatrick is hoping for a significant jump in Europeans coming to visit in January and February.
“People will want to get away in those dark January, February days, and I think New York is always a great spot for coming for shopping, you know, not packed, but I think we’ll see a little bit busier,” he said. “I think it’s gonna be 12 months, if I had to be totally honest. I’m trying to be optimistic about myself and my own business, but I think it is going to be 12 months as long as we don’t get any major hits again.”
International hotel brand citizenM has seen an uptick in U.S. hotel business since the changes to the restrictions were announced, Managing Director of the Americas Ernest Lee said in an email.
“While international tourism is an important part of travel’s recovery in big cities, it’s not a disproportionate driver,” Lee wrote. “We are more focused on the general return of business travel in all segments — domestic, international, and group.”
Data about bookings related to the ban is hard to come by, according to Hotel Association of New York City CEO Vijay Dandapani. However, he said the association saw airline seat capacity for Canada-U.S. travel during the month of October increase 31% year-over-year, a result of removed restrictions between the two countries.
“We can infer and predict a 30% to 40% increase in airline seat capacity between the U.K. and the U.S. and between Europe and the U.S. — which should translate into higher occupancies and rates,” he wrote in an email. “But until bookings are confirmed — horizon has been short through the pandemic — we won’t be able to quantify other than to say it will be on a decidedly upward trajectory.”
Hits to occupancy have already pushed some hotels over the edge, with some closing their doors permanently, including the Roosevelt, the W Hotel Downtown and the Maxwell Hotel. Others, like the Tilbury and the Williamsburg Hotel have gone through Chapter 11 bankruptcy proceedings.
“If you can acquire a hotel in New York right now, it’s a very good time to do it,” said Stephen Rushmore, the New York president of hospitality consultant HVS. “There are distressed hotels out there that are looking to transact … You’re gonna have a lot of overseas people coming back to New York and a lot of overseas investors wanting to invest in New York.”
January and February are typically the slowest months for tourism, so Born said if there is a spike from overseas guests around that time, that would be very welcome.
“I feel much better than I did last year, when I had no open hotels and I was paying my mortgage, my real estate taxes, my insurance, my utilities and had zero revenues,” Born said.