Shortage of rooms in NYC – real or illusory?

A recent New York Times article on new hotels in Manhattan highlights an interesting fact – 2006 is the first year since 02 that will see an increase in room supply. 2005 was a landmark year in many ways – record occupancy rates of 86.4% & ADRs of $223.50 breaking the previous record in 2000.

The current “shortage” is transitory and reflective of the cyclical nature of the industry. As room rates track higher, the economics of building a hotel fits in with the best use for the site – currently it is residential.

New York’s inventory of hotels is actually up by about 25% as compared to what it was 12-13 years ago – growth that is significantly higher than inflation. Much of that was stimulated by lower occupancy taxes besides a better economy. Lowering the real estate tax burden could also help stimulate hotel development.

NYC’s resilient travel & tourism industry has a history of absorbing additional supply.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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