Hotel News Resource: New York City’s Catastrophic Hotel Crisis Isn’t Ending Anytime Soon – New York Post
October 27, 2021
Excerpt from New York Post
A happy ending is in sight to the Big Apple’s hotel industry catastrophe – just wait until 2026!
“I am supremely optimistic for five years from now,” said Vijay Dandapani, president of the Hotel Association of New York. But the short- and medium-term outlooks are another story.
“The key thing is that international travel is not here yet” and there’s no way to know when it will fully return, despite President Biden’s plan to reduce restrictions by some time in November, Dandapani said.
The beleaguered industry’s plight is epic in scope. Of the city’s total 700 hotels pre-pandemic, about 250 either closed or were converted to homeless shelters.
Average occupancy fell from over 80% in 2019 to 33% early this year (it has since upticked to 45%, Dandapani said). By comparison, occupancy never fell below 60% during the earlier crises of 9/11 and the 2008 Wall Street crash.
Room rates have fallen 60% since 2019. A further looming shadow over the business is a flood of new rooms — possibly more than 18,000 — in projects that were started prior to 2020 and are on track to open this year or soon after, including at such marquee-branded properties as the Virgin Hotel, Ritz-Carlton Nomad, the Arlo Midtown and Hard Rock near Times Square.
International business travelers and tourists coming to the city, who spend much more than domestic visitors do, peaked at 13.5 million in 2019, plunged to a mere 2.4 million in 2020 (mostly in January and February) and might modestly rally to 4.6 million this year, according to NYC and Company, the city’s marketing organization.
Even that uptick depends on the details and timing of the eased entry restrictions. “We don’t see business coming back to 2019 levels until 2025,” Dandapani said.
The city’s hotels were under strain even before COVID-19 staggered the industry, due in large part to over-construction that raised the number of rooms from 85,000 a few years earlier to 125,000.
“I am supremely optimistic for five years from now. The key thing is that international travel is not here yet.”
Vijay Dandapani, president of the Hotel Association of New York