Analysts tallying up Sandy's impact on NYC hospitality industry

By Danny King
Hurricane Sandy and its aftermath will hurt New York’s restaurants, but it has boosted car rental demand and will probably leave tour businesses relatively unscathed, members of the local hospitality industry reported last week.

As for its impact on hotel demand in the period leading up to the holiday season, however, the jury still appears to be out.

Few higher-end leisure travelers and business travelers looking for side excursions are changing their plans as a result of the storm, said Kitt Garrett, founder and CEO of the destination-management firm Discover New York and Beyond.

She added that her clients almost exclusively visit Manhattan and are far less likely to inquire about outlying boroughs or suburban areas, which were hit harder by the storm.

“The calls are still coming in,” Garrett said. “Obviously, there are still challenges from New Jersey and Long Island, but Manhattan is fine.”

Still, the storm caused more than a few headaches for a metropolitan area where officials had been hoping to beat last year’s record tourism numbers until swaths of lower Manhattan were shut down by flooding, power outages and no heat.

In 2011, New York attracted 50.9 million visitors. Earlier this year, NYC & Company, the city’s tourism board, set a goal to boost that annual number to 55 million by 2015.

But that effort might be set back by the nearly 20,000 Sandy-related flight cancellations at New York’s three major airports, which saw another 1,100 flights canceled last week as a nor’easter bore down on the area.

For the owners of New York’s approximately 25,000 food-and-beverage establishments, demand was far less of an issue than supplies of food and the absence of workers hamstrung by local transportation issues.

Restaurants that lost power were forced to toss inventory, according to Andrew Moesel, spokesman for the New York State Restaurant Association.

He added that local fuel shortages also made food deliveries a problem. “And if you were closed all of last week, you lost a huge amount of money,” he said.

As for the country’s fifth-largest hotel market, analysts were split on Sandy’s impact. For the week ended Nov. 3, occupancy at New York hotels fell 7.3% from a year earlier, to 80.5%, while rates were almost unchanged, according to Smith Travel Research.

The effect of flight cancellations was partially offset by the boost in room demand from emergency workers, insurance adjusters, stranded travelers and, later in the week, runners who had traveled to the city for the New York City Marathon, which was canceled less than 48 hours before the start of the race.

As for the longer-term effects, STR Senior Vice President Jan Freitag maintained that demand will return to normalcy fairly quickly as flight schedules straighten out and leisure and business travelers resume their travel habits.

Bjorn Hanson, divisional dean of New York University’s school of tourism and hospitality management, took a more pessimistic view of the situation.

Hanson said that the substantial advance warning of Sandy caused enough business-meeting cancellations to put a dent in what has generally been a busy fourth-quarter lodging season for New York.

What’s less in dispute is the storm’s effect on New York-area car rental demand, for which the storm was something of a boon, especially for companies with large off-airport networks, like Enterprise Holdings.

While operations were thrown off by travelers failing to return vehicles on time and by power outages, the influx of business from emergency workers and locals whose own cars had been damaged more than made up for any loss of business from incoming leisure travelers, according to Neil Abrams, principal at Abrams Consulting Group and a former Hertz executive.

Follow Danny King on Twitter @dktravelweekly.
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