The hard-hit industry’s estimated “upward trajectory” is 17 months away, says an insider. Pivots, promotions and reward programs are boosts in the meantime.
By: Joe Dzuenuabowicz
July 22, 2021
When the Loews Regency New York reopened in May after closing for 14 months since the start of the pandemic, the plush Park Avenue hotel had no reservations about making a valuable promotion more easily accessible.
They rolled out a special summer relaunch deal, “Third Night Free,” now in place through Labor Day at the 379-room hotel on Manhattan’s Upper East Side. It’s a simple promotion to prearrange — you pay to stay for two nights, and get one night on the house. It’s worth at least about $350 at current room rates.
It’s a switch, according to press representatives, from its typical “Fourth Night Free” deal. Guests reap the perk after two nights, not three. Amid an ongoing pandemic, it pays to stay nimble and willing to pivot in creative ways. Promotions and incentives can in small ways do their part to boost business, hotel insiders agree.
“Make no mistake, business is up and running and has been much stronger than anticipated,” John Maibach, managing director, told MarketWatch. He added that they have “a long way to go” to get to pre-pandemic levels.”
They’re not alone. The city’s hotel industry is struggling. An American Hotel & Lodging Association report from June showed that New York City has lost about one-third of its hotel rooms since the pandemic. For those that remain, revenue per available room was $95 in May — down 62% from May 2019.
The Hotel Association of New York City (HANYC) figures echo that less-than-rosy picture. Its data indicates that more than 150 of the city’s 700 hotels have closed either permanently or temporarily. Numbers show that citywide occupancy for the week ending July 10 was 65%, and that’s down from 89% for the month of July in 2019.
“We are a far, far cry from where we were then,” said Vijay Dandapani, president and CEO of HANYC, a trade group representing approximately 300 hotels with over 80,000 rooms and about 12,000 employees. Revenue per available room was $128, down by 40% from $213 in July 2019.
“Unambiguously, every single hotel in the city is unprofitable right now,” he told MarketWatch. “It’s a very financially challenging time, very precarious. If you’re not deep-pocketed and you don’t have the ability to withstand the liquidity crisis, it is going to be a solvency crisis.”
Tourism is the lifeblood of hotels, and that avenue is currently obstructed due to COVID-related restrictions. Business travel, conferences and conventions, other major sources of hotel revenue, are also way down.
“What is going to enable us to get out of this precarious financial situation is opening up the borders and, obviously, an improvement of the virus situation around the world,” Dandapani said. “By the end of next year we see ourselves on a clear upward trajectory, not where we were, but on a clear upward trajectory.”
The end of 2022 is 17 months away. Meanwhile, hotels by necessity are getting creative and using what they’ve got to lure guests. In some cases that means relying on time-tested tools, like rewards programs, while in other instances, tailor-made, pandemic-friendly ideas have emerged.
“All the big brands, every single one of them,” said Dandapani, “have one huge weapon that a non-branded hotel doesn’t have, which is a points program. So you come to New York and you get double points or even some bigger ratio.”
The Hyatt’s H, -0.26% “Bonus Journeys” program, for instance, lets travelers earn triple points on every qualifying stay of two nights or more from July 20 through Sept. 15, 2021, its website notes. It’s just one example of a big brand using points.
Other hotels are appealing to guests’ desires for comfort, escape and safety. Summer Share, a 2021 promotion at the Lotte New York Palace on Madison Avenue, came as a direct response to COVID-19. It appeals to visitors seeking a getaway where safety is as important — or more so — as thread counts and scenic city views.
“We just launched this in response to people wanting to travel with their own pod,” said David Shenman, director of sales and marketing, “and the desire we’ve seen for people who miss and want to return to New York City.”
It’s a straightforward idea: Your travel group stays together in one area — whether it’s a large suite, connecting rooms or rooms that are all in the same part of the hotel. “It’s kind of a spin on going out to the Hamptons,” Shenman said.
For the 909-room hotel it’s one way to boost occupancy. “Business is rebounding,” he said. “It is certainly not at the levels that we’re accustomed to running in a busy city like New York City, but business is rebounding. People miss traveling.
“Our numbers are very encouraging for the fall,” Shenman said. “And again, to be clear, not normal levels for the fall. But I think that we’re hopeful that the recovery for New York City will be quicker than the experts had said.”
NYC & Company, the city’s tourism organization, has invested $30 million toward developing a marketing campaign — “It’s Time for New York City” — whose mission is attracting visitors to the city.
“It’s been a devastating time for the hotel business, but I will tell you things are starting to recover,” said Chris Heywood, adding that there’s a “robust pipeline” of new hotels opening and set to open in the city.
“Every week in June has performed better than the previous week,” said Heywood, “a pattern we expect will continue as the #ItsTime campaign takes off.”
The bit-by-bit bumps in tourism are welcome following 2020. An estimated 4 million visitors came to New York City between Memorial Day and Labor Day, down from 17.4 million for the same period in 2019. Heywood has estimated that 10 million visitors will come to the five boroughs this summer.
Mayor Bill de Blasio on Thursday said the city this week has seen its highest demand for hotel rooms since before the pandemic, with more than 481,000 rooms sold, a 17,000 increase from last week.
Dandapani is cautiously optimistic as he takes the long view. “We definitely see our industry coming back fully,” he said. “It’s just a matter of time, and time is a precious commodity.”