With mandated closures continuing to impact New York City’s hospitality sector, the combination of single-digit occupancy levels and mortgage issues have led some to close and have others nearing the precipice.
In souvenir shops from Times Square to the World Trade Center, shelves full of T-shirts and trinkets still (heart) New York. But the proprietors wonder when their customers will, again.
It's been a very challenging year for the hotel industry as a whole. While hotels have seen vacancy rates and RevPAR bounce back from March, numbers are still far below pre-pandemic numbers. As of November 14, hotel analytics firm STR reported that occupancy was at 43.2%, down by 32.7% year over year. The average daily rate was $90.58, a drop of 28.6%, and RevPAR was off 52% from last year. With COVID-19 rising in recent weeks, many potential travelers may change their plans.
The travel industry has been so ravaged by the coronavirus that even a vaccine may not come soon enough to save most hotels in New York City.
New York City’s hotel industry is in crisis, with four out of five properties underpinning commercial mortgage bonds now showing strain, according to the Financial Times. The effects of the coronavirus and overbuilt supply is hitting the nearly $4 billion of hotel mortgages that are bundled into CMBS deals hard.
New York City hotel owners were ordered to pay employees affected by the coronavirus pandemic more than $500 million in an arbitration ruling, The Wall Street Journal reported.
New York City hotel owners were ordered to pay employees affected by the coronavirus pandemic more than $500 million in an arbitration ruling, The Wall Street Journal reported.
A drop in tourist footfall to New York City due to its place as a COVID-19 epicenter is now having knock-on affects on bond markets linked to borrowing and support lent to the sector. Commercial mortgage bonds are now showing strain, with the Hotel Association of New York City saying if just half of the 640 hotels in the city survive the crisis, it would be a "great" outcome.
Twelve years after the housing and mortgage markets’ collapse threw the United States into financial distress not seen since the Great Depression, market watchers are again on the lookout for a possible new banking crisis spawned by upheaval in the U.S. commercial real estate sector.
More bad news for New York City’s hotels — and the loans they’re propping up — is on the horizon.