As all around it crumbles, Manhattan’s hotel market remains sublimely buoyant. But there are subtle signs of cheaper rooms to come.
On any given night in the first three months of 2008, over 80 percent of the borough’s hotel rooms were occupied. Moreover, nearly 85 percent of the rooms in Manhattan’s nicer hotels—the Four Seasons, the Regency, the Waldorf, perhaps—were as well, according to PKF Consulting, a firm that tracks hotel markets nationwide.
And these hotel guests continued to pay some of the highest rates anywhere in the Western Hemisphere: In that eastern midtown haven of nicer hotels, a guest was likely to pay over $300 a night at the start of 2008; in the hotels above 59th Street, the average for those first three months was even higher, at $348.73 nightly.
That Manhattan remains an expensive and often vexing place to get a room is no surprise. The hotel market’s been an exclamation point throughout Gotham’s real-estate boom.
There are many reasons: the strong euro and British pound (heck, the parity of the Canadian dollar and Swiss franc); a steady stream of tourists to the safest big city in America (a record 46 million in 2007, according to the Bloomberg administration); and a relative dearth of supply against demand despite robust hotel development, for Manhattan anyway.
Has it all peaked, though? Hotels would, of course, be following the path of the already weaker Manhattan housing and office markets.
The overall average daily room rate for Manhattan in the first three months of 2008 was $273.71. The same time last year it was $251.53, a not negligible $22-and-change daily difference in trying economic times. But these 2008 (and 2007) rates pale against the averages of only a couple of years ago: The rate each month in the last four months of 2006, for instance, averaged above $300.
And the high occupancy rates of this year—71 percent to over 84 percent—have been lower than during the busier months of 2005 and 2006, when as many as 90 percent of hotel rooms might’ve been booked on a given night.
Make no mistake: Manhattan hotels still cost more than in most cities, and they’re more difficult to reserve. But, as with much of Manhattan real estate in 2008, the cracks in the mighty edifice show; the prices have started to come down, or, at the least, have peaked. Prepare for a cheaper night’s sleep.