NYC Hotels Are Ready to Party as Guests Slowly Start to Return
(Bloomberg) -- Guests are trickling back to New York’s hotels, but they’re not quite ready to cut loose -- the latest signal that the industry faces a long recovery after a brutal year.
“We used to have people get drunk and take their clothes off and jump in the swimming pool,” said Standard International Chief Executive Officer Amar Lalvani, whose New York hotels include lifestyle properties in the East Village and Chelsea. “There’s a real desire for it, but it’s not the Roaring ‘20s yet.”
New York’s tourism recovery is lagging behind vacation hot spots, including in Florida. Even as long-shuttered Manhattan properties -- from including the Plaza to Ian Schrager’s Public -- reopen, occupancy rates are recovering slowly.
Debt woes and the uncertain return of corporate and group bookings also cloud the horizon for the hard-hit industry. Roughly 38% of New York hotels with loans in commercial-mortgage backed securities were at least 30 days behind on payments, according to May data compiled by Trepp. That compares to 14% across the U.S.
The Standard High Line in Chelsea has gotten busier on the weekends but remains sluggish during the workweek, when business travelers would typically pick up the slack. Owner Gaw Capital is more than 90 days delinquent on a CMBS loan, according to data compiled by Bloomberg.
A representative for Gaw declined to comment.
New York’s hotel industry was hit hard early in the pandemic, which at one point shuttered nearly half of the city’s roughly 700 hotels. Some tried to scrape by offering low-cost rooms to government agencies.
Occupancy rates increased to 59% last week, according to lodging data provider STR, a marked improvement from a year ago, but well below bookings elsewhere in the U.S.
Memorial Day weekend was especially good in Miami, where revenue per available room was $323 on Saturday, more than 2.5 times higher than 2019. RevPar, which measures prices and occupancy, was $147 at New York hotels, declining 39% from 2019.
New York’s reliance on corporate bookings augurs a slower rebound. CBRE Group Inc. is predicting that U.S. occupancy rates will return to pre-pandemic levels by 2023, but the recovery could take two years longer in New York.
“Supply is coming back online, but it’s still primarily leisure travelers that are using hotels,” said Mark VanStekelenburg, executive vice president at CBRE Hotels Advisory. “It’s going to be a bit more of a difficult recovery for New York versus the rest of the U.S.”
New York hotels are doing their best to rekindle demand while respecting guests’ instinct for taking things slowly.
Schrager, widely credited with inventing the boutique hotel, said he will avoid large events when he relaunches the Public later this month. Workers at the hotel, just south of Houston Street, will stay masked, and the management will take advantage of the hotel’s ample outdoor spaces as long as the weather allows.
Schrager also has high hopes for the Times Square Edition, which closed last March amid a dispute between owner Maefield Development and a group of lenders led by Natixis SA. While a court granted the lenders the right to move forward with a foreclosure, the hotel reopened on June 1.
“The scars don’t go away immediately, but people are champing at the bit to get out there,” Schrager said. “I think Times Square is forever.”
©2021 Bloomberg L.P.