New York hotels are poised to make a brand new start of it

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Pedestrian traffic in Times Square reached a high for 2021 on the first weekend of April, according to the Times Square Alliance.
Pedestrian traffic in Times Square reached a high for 2021 on the first weekend of April, according to the Times Square Alliance. Photo Credit: Danny Perez for the Times Square Alliance

On the heels of a tough winter, New York's embattled tourism and hospitality sectors may finally be turning the corner.

According to recent STR data, the city's hotels hit 50.4% occupancy for the week of March 21, which was among one of its highest weekly averages since late last June. The week prior, on Saturday, March 20, occupancy had surged to 65.4%.

But there is an important caveat. Even though data for March 21 to 27 remains a far cry from the average occupancy level of 83.8% for the comparable week in 2019 -- and a seemingly giant leap forward from 14.2% for the comparable week in 2020, at the outset of the pandemic -- the numbers are calculated from a much-reduced base of inventory.

"There's definitely light at the end of the tunnel," said Jan Freitag, STR's senior vice president of lodging insights. "Not just from looking at New York City occupancy data but also from the macro-perspective, in terms of [Covid vaccine] shots being administered each day, GDP growth being revised upward, unemployment coming down. All of this bodes well for travel in general and for New York City specifically."

But, Freitag acknowledged, "we do have this little wrinkle, because a lot of rooms in the city are still closed." STR estimates that around 30% of New York's total room supply remains offline.

When factoring in those temporary room closures due to the pandemic, STR reports that New York's total-room-inventory occupancy for the week of March 14 was at a more sobering 32.2%. 

Vijay Dandapani
Vijay Dandapani

"There are 226 hotels that are closed, either temporarily or permanently," said Vijay Dandapani, president and CEO of the Hotel Association of New York City. "Thirty-odd hotels have presumably closed permanently, and 139 hotels are now given entirely to the homeless-shelter business. So, you've got somewhere around 400 out of the 700 pre-Covid hotels that are now out of the mix. The inventory is really skewed."

Still, as occupancy for the city's open properties ticks upward, some hotels that have been long shuttered are restarting operations. Most recently, Manhattan's Mandarin Oriental New York and Park Hyatt New York both reopened on April 1.

Demand is starting to pick up at Manhattan hotels like the Lotte New York Palace, particularly summer bookings.
Demand is starting to pick up at Manhattan hotels like the Lotte New York Palace, particularly summer bookings.

Recovery for dining, attractions

In addition to improving hotel metrics, the city is seeing foot traffic at various tourist hot spots start to build.

According to the Times Square Alliance, Times Square pedestrian counts have increased to a 2021 high of approximately 150,000 people a day for the weekend of April 2 to 4, versus a previous average of around 100,000 visitors per day since September 2020. (The Times Square Alliance uses automated, 24/7 pedestrian count cameras that track people entering and walking through the district boundaries in order to collect its data.)

"We are starting to see green shoots of recovery," said Chris Heywood, executive vice president of global communications for NYC & Company. 

Heywood credited some of the spring's optimism to the easing of New York state's travel restrictions, with domestic travelers no longer required to quarantine when entering New York from another state or U.S. territory, effective April 1. 

"That is a game-changer for New York City," said Heywood. "We're hoping to start to attract more visitors, and our focus in the near-term is really getting those domestic visitors back, which represent 80% of our visitor volume in any given year."

Other tailwinds helping to contribute to the city's comeback include a recent expansion of indoor dining capacity to 50% and the reopening of various city attractions and experiences as well as an anticipated fall restart for Broadway.

Becky Hubbard
Becky Hubbard

Becky Hubbard, general manager for the Lotte New York Palace and a Coalition for NYC Hospitality & Tourism Recovery steering committee member, confirmed that demand has begun picking up.

"People are very curious to see what the city is like right now," said Hubbard. "In the last couple weeks, we've seen a bit of an uptick in our occupancy. And we're also starting to see people book into the end of summer, for July and August."

Dandapani said that many of the city's still-closed hotels are targeting June, July and August reopenings, with the hopes that the market will be on more solid ground by summer.

"I remain completely optimistic that New York will make a comeback," added Dandapani. "In such a small geographic concentration, the range and breadth of cultural experiences and other attractions that you get are simply not replicable in other parts of the country." 

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