The Jewish Voice: NYC Hotel Industry Yet to Reach Full-Scale Recovery After Devastating Pandemic
By HADASSA KALATIZADEH
March 28, 2023
New York City’s hotel industry, devastated during the COVID-19 pandemic, is on its way to recovery, but not quite there yet.
As reported by the NY Post, there is plenty of optimistic news and positive metrics coming out for NYC’s hotel industry, but there is still a way to go to reach a full recovery. On a positive note, new large-scale hotels are opening up. Still, countless iconic hotels were shuttered forever. Occupancy rates at NYC hotels are greatly surpassing 2021 levels, but still remain below pre-Covid levels. RevPAR, or revenue per available room, is improving, but still not where the industry would like, as per Vijay Dandapani, CEO of the Hotels Association of New York City (HANYC).
He maintains that the industry has suffered so much, but is still subject to a hotel occupancy tax of 5.875%. He says the levy is overwhelming and deters guests and especially large groups from staying in NYC hotels. “If you’re planning an event to come to Madison Square Garden to see NCAA basketball, for example,” Dandapani said, noting that the oversized tax makes a big enough difference as to keep groups and events from staying overnight. HANYC is lobbying the city to cut the tax down to 2.875% for at least two years. In June of 2021, Mayor Bill de Blasio had dropped the tax all together, but for only three months. “Not enough to do much good,” said Dandapani.
For tourists, all the hotel closures and new openings may also be too confusing to track. About a dozen upscale Manhattan hotels were shuttered in 2020, with only three making plans to reopen, according to an analysis prepared for CBRE by Lodging Econometrics. The reopenings include: the uptown Four Seasons Hotel; the former Roger on Madison Avenue which is slated to reopen in May under the name AKA Nomad; and the Surrey on East 76th Street, to open as Surrey, a Corinthia Hotel.
The city had hosted a record 66 million visitors in 2019. That number has yet to be duplicated. Tourism reached 56 million in 2022, and is projected to hit 61 million for 2023. As per the Post, hotel occupancy rates in 2022 reached 75 percent, which is a big improvement from Covid years, but still below the pre-COVID average of 86%. Dandapani added that those numbers are overly optimistic, because there are less rooms currently available. NYC now has roughly 118,000 open hotel rooms, down from 126,000 before the pandemic — and this is after 6,000 newly constructed rooms were added over the past two years, said Dandapani. Also, the “open” rooms include some 9,000 units which are being used to house migrants who were sent in from the southern borders. These rooms are counted as “occupied”, overestimating the recovery.
Per the Post, Dandapani also said that NYC’s hotels’ RevPAR lags compared to other major cities around the world. PwC’s Manhattan Lodging Index announced that the metric increased by 54 percent, in the fourth quarter of 2022 year-over-year. Still, Dandapani said RevPAR increased 15% in Paris, and 7% in London, in 2022 over 2019. In NYC, RevPAR was still $4 less on average compared with 2019”, he added, “and that was not adjusted for inflation.” He also added that even this uptick in RevPAR was only felt by the luxury hotels, not the industry as a whole.