Manhattan hotel occupancy rises to record

Real Estate Weekly, Feb 19, 1997

"The fourth quarter of 1996 was exceptionally robust due to a combination of strong convention and commercial bookings in October and November, as well as a very active tourism and leisure market through the fall, particularly around the holidays," said Arthur Adler, principal in Coopers & Lybrand's hospitality consulting group in Manhattan.

For all of 1996, Manhattan hotel occupancy rates increased 2.8 percent over 1995, with average annual occupancy at 83.6 percent for the year, Coopers & Lybrand reports. Average daily rates for Manhattan hotel rooms rose from $145.35 in 1995 to $160.57 for all of 1996, a boost of 10.5 percent for the year, Coopers & Lybrand says.

By segment, tourist-class hotels achieved the highest annual occupancy at 87.2 percent, largely due to their appeal to the mass market. Closely following tourist-class hotels are convention hotels at 87 percent occupancy. The first-class and luxury hotel segments each finished the year at or over 80 percent occupancy, with first-class hotels at 82 percent and luxury hotels at 80 percent. Deluxe hotels had the lowest occupancy of all hotel segments at 76 percent, still considered a very strong year, Adler said.

"The overall strength of the hotel market across all segments was caused by the strong economy, the bull stock market and the weak dollar, which encouraged overseas visitors to the United States," Adler explained. "In addition, the supply of hotel rooms in Manhattan was static during 1996, with 41 fewer rooms available each night relative to 1995."

For the first quarter of 1997, Manhattan hoteliers anticipate occupancy will increase to 74 percent from 71.3 percent in the year-earlier period, a rise of 3.8 percent, Coopers & Lybrand says. For the first quarter of 1997, Manhattan hoteliers anticipate average daily room rates will rise to $157.29 from $145.96 in the year-earlier period, a 7.8 percent increase.

"We anticipate 1997 will be every bit as strong as 1996," Adler said. "There are no indications that demand will weaken. The supply of rooms will continue to be static, and no major hotels are under development. It will require a fundamental change in the economy or in travel patterns to dampen another very strong year for New York's lodging industry."