Hotel Intelligence New York

Hotel Intelligence New York
April 2014
Market insight
Contributors
• Hotel transaction volume in Manhattan reached $1.8 billion
in 2013.
Arthur Adler
Managing Director and CEO-Americas
[email protected]
• Investment volume expected to increase to $2.7 to $2.8 billion
in 2014 due to continued liquidity among Manhattan hotels as
well as the increase in available product.
• Hotel demand is at all-time high; however, RevPAR growth will
be more tepid in 2014 due to 6,400 additional rooms slated to
enter the market.
Jeffrey Davis
Managing Director
[email protected]
Greg Hartmann
Executive Vice President
[email protected]
Gilda Perez-Alvarado
Executive Vice President
[email protected]
Edouard Schwob
Vice President
[email protected]
Neha Gandhi
Associate
[email protected]
Eric Gorenstein
Analyst
[email protected]
JLL’s Hotels & Hospitality Group serves as the hospitality industry’s global leader in real estate services for luxury, upscale, select service and
budget hotels; timeshare and fractional ownership properties; convention centers; mixed-use developments and other hospitality properties. The
firm’s 300 dedicated hotel and hospitality experts partner with investors and owner/operators around the globe to support and shape investment
strategies that deliver maximum value throughout the entire lifecycle of an asset. In the last five years, the team completed more transactions than
any other hotels and hospitality real estate advisor in the world totaling nearly US $36 billion, while also completing approximately 4,000 advisory,
valuation and asset management assignments. The group’s hotels and hospitality specialists provide independent and expert advice to clients,
backed by industry-leading research.
For more news, videos and research from JLL’s Hotels & Hospitality Group, please visit: www.jll.com/hospitality or download the Hotels & Hospitality
Group’s iPhone app or iPad app from the App Store.
April 2014 | Hotel Intelligence New York 3
Manhattan: most active U.S. hotel investment market
Manhattan was the most active hotel investment market nationally in 2013. With total hotel transaction volume of $1.8 billion in 2013, Manhattan
liquidity outranked that of Oahu Island, San Francisco, Los Angeles, Boston and Washington, D.C. Globally, Manhattan was among the top-five
hotel investment markets.
Transaction volume in Manhattan is expected to range from $2.7 to $2.8 billion in 2014, significantly above volumes observed in 2013.
The Manhattan hotel market is the strongest RevPAR performer among the top-25 U.S. hotel markets with a 25% RevPAR premium over the next
highest market. In 2013, Manhattan’s upper-tier hotels posted a RevPAR increase of 4.3% over 2012 levels.1
Over 6,400 hotel rooms will be added to the Manhattan market in 2014, increasing the market’s room inventory by 8%. With close to 15,000 new
rooms anticipated to enter the market between 2014 and 2016, Manhattan has more rooms under construction than any other U.S city.
Despite the robust supply pipeline, based on historical trends, these rooms are expected to be absorbed relatively quickly. The market’s upper-tier
hotels are expected to achieve RevPAR growth of 3% to 3.5% in 2014, driven largely by rate growth.
$17 billion in hotel transactions since 2000
To summarize Manhattan hotel transaction volume in the early 2000s,
from 2000 to 2003 transaction levels averaged approximately $300
million annually. Liquidity jumped to $1.8 billion in 2004 as RevPAR
turned positive for the first time since 2000 and leverage started to
expand. In 2005, deal volumes totaled $1.6 billion. Annual transaction
volume in 2006 surged to $2.8 billion and reached $2.9 billion in 2007.
Manhattan Hotel Transaction Volume
$4,000
$3,500
$1,000
$3,000
$800
$2,500
$600
$2,000
$1,500
$400
$1,000
$200
$500
$0
Transaction Volume
Source: JLL
Smith Travel Research
1
$/sq. ft.
2013
2014F
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
$0
Price per key
Transaction Volume ($M)
Price per key ($ thousands) and $/sq. ft.
$1,200
Transaction volume declined in 2008 and 2009 due to the economic
downturn, with total volume decreasing to $500 million in 2009.
However, liquidity returned in 2010, with investment volume increasing
to $1.6 billion.
2011 marked the return of investors seeking to acquire assets priced
below replacement cost. With debt becoming increasingly available for
Manhattan deals, total investment volume boomed at $3.5 billion—an
all-time high. In 2012, Manhattan hotel transaction volume moderated
to levels consistent with the second and third most active years on
record (2006 and 2007).
4 Hotel Intelligence New York | April 2014
A top global hotel investment market
Manhattan acquisitions dominated by private equity and institutional
investors in 2013
In 2013, Manhattan hotel transaction volume declined from 2012
levels by 25%, largely due to the lack of quality product listed during
the first half of the year. The delay in the closing of multiple large
transactions, originally listed in 2013, also contributed to the reduced
transaction volume figure.
Despite the decrease in transaction volume witnessed in 2013, the
average transaction size of $153 million was nearly 20% above the
average deal size of $131 million during 2012. The average price
per key of $726,300 was 30% higher when compared to that of the
previous year. Additionally, the average sales price per sq. ft. of
$1,100 during 2013 was considerably higher than the average price
per sq. ft. of $775 in 2012.
% of acquisition value
Private equity
43%
Institutional investor
19%
Hotel owner/operator
16%
REIT
14%
Developer
8%
Source: JLL
The composition of hotels that transacted in 2013 was the key driver
influencing the increase in average sales price per sq. ft. For example, the
sale of the Helmsley Park Lane was purchased for $1,600 per sq. ft. in late
2013, to be potentially converted to residential use. Since 2010, average
sales price per room and per sq. ft. have increased at a compound annual
growth rate of 26% and 14%, respectively.
Lack of quality product brought to market, in conjunction with the
government sequester and weaker economic sentiment in Europe,
contributed to temper investors’ appetite in 2013. Nevertheless,
Manhattan remained one of the top investment markets in the world
due to both the wide presence of foreign capital, which represented
15% of total investment volume in 2013, and the availability of debt
for established investors.
During 2013, private equity firms were the most active buyers of
Manhattan hotel assets, accounting for 43% of acquisitions by
volume. This buyer type dominated acquisitions in 2013 with large
Buyer Type
transactions such as the Witkoff Group’s purchase of the 596-room
Helmsley Park Lane Hotel for $660 million, and the purchase of the
288-room Flatotel by affiliates of the Rockpoint Group, Atlas Capital
Group and Procaccianti Group for $180 million.
Other large transactions that shaped the investment market include
the sale of the 214-room former Setai Fifth Avenue for $229 million,
which is now the Langham Place, and the 241-room Viceroy Willow
Hotel transaction for $148.5 million. The 226-room Holiday Inn
Manhattan was among the few midscale hotels that transacted in the
city in 2013. At a price per room of $500,000, the trade was well
above the price per room of similar select service trades in Manhattan
during 2012 that ranged from $350,000 to $450,000 per key.
Finally, despite the limited availability of development sites for sale,
the average price for land ranged from $250 to $400 per sq. ft.
Prominent development sites that transacted include the sale of a
former parking garage near to the Chelsea Flea market for $67 million
as well as the sale of a former office building for $58 million, which is
the site of the anticipated 140-room AKA Wall Street.
New York significant hotel transactions 2013
Date
Property
Rooms
Price
Price / Room USD
Buyer
596
$660,000,000
$1,107,000
Witkoff Group 72
$28,500,000
$396,000
Assa Properties
241
$148,500,000
$616,000
American Realty Capital New York Recovery REIT
$229,000,000
$1,070,000
Great Eagle Holdings Limited
42
$18,500,000
$440,000
Undisclosed
226
$113,000,000
$500,000
Carey Watermark
$101,000,000
$567,000
Hersha Hospitality Trust
$85,000,000
$746,000
Prudential
Nov-13
Helmsley Park Lane
Oct-13
The Mave
Sep-13
Viceroy New York
Sep-13
The (Former) Setai Fifth Avenue
214
Aug-13
Hotel East Houston
Jun-13
Holiday Inn Manhattan 6th Avenue
Apr-13
Hyatt Union Square
178
Mar-13
James Hotel
114
Mar-13
Hyatt Place Midtown Manhattan
185
$76,200,000
$412,000
Chesapeake Lodging Trust
Jan-13
Flatotel
288
$180,000,000
$625,000
Joseph Chetrit and David Bistricer
Jan-13
Alex Hotel
203
$115,000,000
$567,000
Wyndham Hotels and Resorts
Jan-13
Beekman Tower Hotel
170
$82,150,000
$483,000
Silverstein Properties
2,529
$1,836,850,000
$726,315
Total
Source: JLL
April 2014 | Hotel Intelligence New York 5
Deal volume to total $2.7 to $2.8 billion in 2014
Given pent up demand from 2013 coupled with the availability of
high-quality product and continued access to capital, deal volume is
projected to increase in 2014. Private equity investors will continue to lead
through their significant buying power. REITs, which represented 25% of
investment volume in 2012, and 14% in 2013, will continue to make
selective acquisitions of core properties during 2014 while also focusing
on the asset management and disposition of owned properties.
Buyers from Asia and the Middle East will continue to target trophy
and high-profile assets in Manhattan. In addition, several international
brands are committing large amounts of capital to establish their
presence in Manhattan.
Active sellers in 2014 are expected to include institutional funds,
REITs, developers seeking liquidity, brands in cases where they can
retain management contracts and investors seeking to exploit the
improving transaction market and low cap rates.
Hotel debt capital markets continue to remain strong
With the influx of CMBS debt into hotel investments, a notable
development in 2013, capital is pouring into the sector and the pool of
lenders is broadening. New York’s hotel CMBS volume jumped to $1.1
billion in 2013, a 165% increase over the 2012 level.2
A significant portion of this uptick resulted from the re-emergence
of the floating-rate CMBS market, which had been largely muted since
the downturn. In the U.S., floating-rate hotel CMBS volume totaled
$2.3 billion in 2013, compared to $1.2 billion in 2012, representing an
85% increase. In New York, floating-rate hotel CMBS volume totaled
$215 million in 2013, compared to $75 million in 2012.3
In addition to being one of the few financing outlets for large balance
financings, the floating-rate CMBS market is significant for hospitality:
Firstly, the market provides relatively high leverage with attractive
pricing compared to other floating-rate financing alternatives.
Additionally, floating-rate CMBS loans are currently being originated
at leverage levels as high as 80% of value. This compares to
approximately 60% loan-to-value financing from bank lenders.
Trepp, LLC ®
Trepp, LLC ®
Transaction arranged by JLL
2
3
4
Secondly, the LIBOR index has a notable correlation with both U.S.
GDP and RevPAR. As a result, the cost of floating-rate debt generally
moves directionally with changes in RevPAR, making it an attractive
hospitality financing vehicle.
Aside from CMBS debt, balance sheet lenders are also becoming
more active. Across the spectrum of commercial banks, the spreads of
debt funds, mortgage REITs, and life insurance companies continue to
compress. Balance sheet lenders tend to be more selective with regard
to asset quality and sponsorship, but they do provide floating-rate
structures that are favored by hotel owners. The lenders are expected to
continue favoring core markets.
New York is therefore expected to be at the forefront of financing
options that will increase transaction volume in the market. Notable
balance sheet loans originated on Manhattan hotels in 2013 include
the Waldorf Astoria with a $525 million loan from HSBC and
DekaBank, the Milford Plaza Leasehold with a $255 million loan from
NorthStar Realty Finance, the Baccarat Hotel encompassing a $235
million loan from Bank of America, the Manhattan at Times Square
Hotel with a $185 million loan from Wells Fargo and Blackstone and
the Algonquin Hotel with a $45 million loan from Bank of China.4
We anticipate the debt markets to continue to improve, as more
groups enter the market and drive greater competition. Furthermore,
as the recovery deepens, lenders will have greater confidence lending
to hotel investors, as most properties will have experienced positive
year-over-year RevPAR metrics since 2010. All of these factors,
combined with an improving economic outlook, should drive further
spread compression in 2014.
6 Hotel Intelligence New York | April 2014
New York’s economic recovery continues
Gross metro product is forecast to grow by 2% in 2014, followed by growth of 2.6% in 2015. Unemployment levels are expected to progressively
decrease. New York will remain the country’s largest urban economic force, which bodes well for hotel demand.
New York key economic indicators
Real gross metro product (% change)
Total employment (000s)
Total employment (% change)
2010
2011
2012
2013
2014F
2015F
2016F
2017F
3.6
1.1
1.4
2.4
2.0
2.6
2.9
2.7
8,306
8,414
8,560
8,705
8,818
8,937
9,056
9,158
-0.1
1.3
1.7
1.7
1.3
1.3
1.3
1.1
Unemployment rate (%)
9.0
8.6
8.8
8
7.1
6.7
6.1
5.6
Personal income (% change)
3.5
5.5
3.1
2.1
4.7
4.6
4.9
5.2
18,944
19,068
19,173
19,273
19,365
19,447
19,513
19,560
0.7
0.7
0.5
0.5
0.5
0.4
0.3
0.2
Real gross domestic product (% change)
2.5
1.8
2.8
1.9
2.7
3.2
3.4
3.2
Employment (% change)
-0.7
1.2
1.7
1.6
1.7
2.0
2.0
1.7
Population (000s)
Population (% change)
U.S. economy
Source: IHS Global Insight
Robust supply pipeline
There are approximately 84,000 existing hotel rooms in Manhattan,
with an average hotel size of 240 rooms. From 2000 to 2008, the
supply of hotels in Manhattan increased at an annual rate of 2%, in
line with the long-term average for the U.S. Room stock remained
mostly stable from 2000 to 2006, largely due to the conversion of
several upper-tier properties to residential use.
Beginning in 2007, new room openings started to exceed the longterm average and select service hotel openings were particularly
prevalent in Midtown West and Lower Manhattan, where barriers to
entry were lower than in other areas of Manhattan. New openings
peaked in 2010 when some 5,400 rooms entered the Manhattan supply.
Only 925 rooms entered the market in 2011, two years after the
depth of the downturn, due to the lack of financing and stalled
developments. At 1,370 new rooms, 2012 saw a 50% increase in the
annual number of rooms added to the market with 1,320 new rooms,
but the figure remained below the rate of openings observed during
2010. In 2013, another 4,200 new rooms entered the market.
For 2014, 2015 and 2016, the market will continue to experience
elevated supply growth, with new openings concentrated in Downtown
and Midtown submarkets with the majority of anticipated supply in the
midscale and limited service categories. In the short term, RevPAR
growth is expected to be tempered due to moderate ADR growth and
stabilizing occupancy levels.
However, room night demand is at an all-time high, driven by both
domestic and international visitors. Further putting Manhattan’s supply
growth into perspective is that the rate of room additions from 2000 to
2016 is expected to average 2.7% per year, which is within one
percentage of the long-term average annual supply growth in the U.S.
as a whole.
April 2014 | Hotel Intelligence New York 7
Hotel supply in Manhattan 2000-2016F
Neighborhood
Downtown
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014F
2015F
2016F
Hotels
14
11
12
12
11
11
12
13
16
18
25
24
26
27
36
39
41
Rooms
3,593
2,585
2,883
2,883
2,739
2,739
2,804
2,849
3,201
3,721
5,274
4,811
5,344
5,434
6,982
7,749
8,445
-28.1% 11.5%
0.0%
-5.0%
0.0%
2.4%
1.6%
12.4%
16.2%
41.7%
-8.8%
11.1%
1.7%
28.5%
11.0%
9.0%
85
88
92
99
103
103
Change
Midtown
South
Hotels
42
46
45
49
52
52
54
58
68
72
79
Rooms
4,764
5,088
4,988
5,445
5,784
5,784
6,034
6,368
7,900
8,404
9,700
10,474 10,799 11,329 12,528 13,623 14,352
6.8%
-2.0%
9.2%
6.2%
0.0%
4.3%
5.5%
24.1%
6.4%
15.4%
8.0%
3.1%
4.9%
10.6%
8.7%
5.4%
163
165
165
163
164
165
168
170
182
192
193
196
211
227
242
242
Change
Midtown
Hotels
159
Rooms 52,227 52,993 53,840 53,839 53,263 53,520 53,366 53,684 54,053 56,027 58,465 59,089 59,751 62,847 66,454 69,976 71,237
Change
Uptown
1.5%
1.6%
0.0%
-1.1%
0.5%
-0.3%
0.6%
0.7%
3.7%
4.4%
1.1%
1.1%
5.2%
5.7%
5.3%
1.8%
Hotels
29
29
29
28
28
27
27
27
27
27
28
28
27
27
29
29
29
Rooms
4,418
4,418
4,418
4,268
4,268
4,083
4,070
4,070
4,070
4,070
4,194
4,194
4,074
4,074
4,164
4,164
4,374
0.0%
0.0%
-3.4%
0.0%
-4.3%
-0.3%
0.0%
0.0%
0.0%
3.0%
0.0%
-2.9%
0.0%
2.2%
0.0%
5.0%
249
251
254
254
254
258
266
281
299
324
330
337
357
391
413
415
Change
Total
Hotels
244
Rooms 65,002 65,084 66,129 66,435 66,054 66,126 66,274 66,971 69,224 72,222 77,633 78,568 79,968 83,684 90,128 95,512 98,408
Change
0.1%
1.6%
0.5%
-0.6%
0.1%
0.2%
1.1%
3.4%
4.3%
7.5%
1.2%
1.8%
4.6%
7.7%
6.0%
3.0%
Source: JLL
Manhattan compound annual supply growth 2010-2013 and 2014-2016
by neighborhood
Uptown
2010-2013: -1.0%
2014-2016: 2.5%
Midtown
2010-2013: 2.4%
2014-2016: 3.5%
Midtown South
2010-2013: 5.3%
2014-2016: 7.0%
Downtown
2010-2013: 1.0%
2014-2016: 10.0%
Source: JLL
Notable openings in 2014 are expected to include the 246-room
Residence Inn World Trade Center at 170 Broadway, the 210-room
Park Hyatt at 157 W 57th Street and the 114-room Baccarat New
York, at 20-24 W 53rd Street. Another major project for 2015 is the
273-room Clock Tower Building at 1 Madison Avenue which is slated
to become an Edition Hotel.
As the expansive development pipeline indicates, building hotels
remains a coveted investment option in Manhattan. Based on our
research, development costs range from $350,000 to $450,000 per
room for select-service hotels and $650,000 to $1.3 million per room
for full-service hotels.
8 Hotel Intelligence New York | April 2014
Manhattan key expected hotel openings - 2014
Name
Rooms
Status
Year of
opening /
conversion
Market
Submarket
Jarmulowsky Bank Building
105
In Construction
2014
Downtown
City Hall/Insurance
aloft Financial District
128
In Construction
2014
Downtown
City Hall/Insurance
Comfort Inn & Suites Chinatown
41
In Construction
2014
Downtown
City Hall/Insurance
Fairfield Inn & Suites New York Lower Manhattan
176
In Construction
2014
Downtown
City Hall/Insurance
Four Points Financial District
264
In Construction
2014
Downtown
City Hall/Insurance
24-26 John Street
90
In Construction
2014
Downtown
Financial District
Hampton Inn Manhattan/Downtown-Financial District
82
In Construction
2014
Downtown
Financial District
Residence Inn World Trade Center
246
In Construction
2014
Downtown
Financial District
Holiday Inn Manhattan Financial District
416
In Construction
2014
Downtown
World Trade Center
Hilton Garden Inn Central Park South Midtown West
401
In Construction
2014
Midtown
Columbus Circle
Park Hyatt Hotel New York
210
In Construction
2014
Midtown
Columbus Circle
Hilton Garden Inn Midtown Project
232
In Construction
2014
Midtown
Grand Central
SLS New York
190
In Construction
2014
Midtown
Grand Central
Archer Hotel
180
In Construction
2014
Midtown
Penn Plaza/Garment District
Galerie 515 Hotel & Condominium Residences
87
In Construction
2014
Midtown
Penn Plaza/Garment District
Homewood Suites 37th Street
293
In Construction
2014
Midtown
Penn Plaza/Garment District
Baccarat New York
114
In Construction
2014
Midtown
Plaza District
Hilton Garden Inn New York/Manhattan-Midtown East
205
In Construction
2014
Midtown
Plaza District
Hampton Inn - Times Square W41st Street
299
In Construction
2014
Midtown
Times Square
Hyatt Place Times Square
130
In Construction
2014
Midtown
Times Square
Cambria Suites Times Square
196
In Construction
2014
Midtown
Times Square
Citizen M Times Square
230
In Construction
2014
Midtown
Times Square
Hilton Garden Inn Project Times Square
282
In Construction
2014
Midtown
Times Square
Knickerbocker Hotel
386
In Construction
2014
Midtown
Times Square
WestHouse New York
172
Open
2014
Midtown
Columbus Circle
Cambria Suites Chelsea
135
In Construction
2014
Midtown South
Gramercy Park
501-503 Canal Street Project
160
In Construction
2014
Midtown South
Hudson Park
The Hugo
122
In Construction
2014
Midtown South
Hudson Park
Stories Hotel
33
In Construction
2014
Midtown South
SoHo
Citizen M Bowery
315
In Construction
2014
Midtown South
SoHo
Indigo Orchard Street
250
In Construction
2014
Midtown South
SoHo
Hotel Ludlow
170
In Construction
2014
Midtown South
SoHo
Audubon Hotel
36
In Construction
2014
Uptown
Harlem
514 W. 168th St. Project
54
In Construction
2014
Uptown
Harlem
Source: JLL
April 2014 | Hotel Intelligence New York 9
Manhattan key expected hotel openings - 2015
Name
Rooms
Status
Year of
opening /
conversion
Market
Submarket
Thompson 5 Beekman St Project
287
In Construction
2015
Downtown
City Hall/Insurance
Courtyard Greenwich Street Project
300
In Construction
2015
Downtown
World Trade Center
Sheraton Downtown
180
In Construction
2015
Downtown
World Trade Center
Even NY
230
In Construction
2015
Midtown
Grand Central
Tommie Midtown
250
In Construction
2015
Midtown
Grand Central
Marmara New York
109
In Construction
2015
Midtown
Grand Central
218 W 35th St Hotel Project
330
In Construction
2015
Midtown
Penn Plaza/Garment District
aloft Midtown
176
In Construction
2015
Midtown
Penn Plaza/Garment District
333 W 38th Street Project
79
In Construction
2015
Midtown
Penn Plaza/Garment District
Courtyard by Marriott at Javits Convention Center
399
In Construction
2015
Midtown
Penn Plaza/Garment District
Embassy Suites NY
313
In Construction
2015
Midtown
Penn Plaza/Garment District
Le Soleil NYC
161
In Construction
2015
Midtown
Penn Plaza/Garment District
Holiday Inn 8th Avenue
288
In Construction
2015
Midtown
Penn Plaza/Garment District
Jade Midtown
114
In Construction
2015
Midtown
Penn Plaza/Garment District
1 Hotel Central Park
294
In Construction
2015
Midtown
Plaza District
E 47th Street Project
93
In Construction
2015
Midtown
Plaza District
Firmdale Boutique Hotel Project
86
In Construction
2015
Midtown
Plaza District
Riu Plaza NY Times Square
600
In Construction
2015
Midtown
Times Square
32 W 29th Street Project
117
In Construction
2015
Midtown South
Chelsea
Clock Tower Building
273
In Construction
2015
Midtown South
Gramercy Park
Tommie West SoHo
329
In Construction
2015
Midtown South
Hudson Park
Public New York
376
In Construction
2015
Midtown South
SoHo
Source: JLL
10 Hotel Intelligence New York | April 2014
Occupancy levels declined notably in Manhattan during the downturn
following 9/11. During the most recent downturn, however, it was
average daily rates that were impacted more significantly. The
recovery periods that followed these downturns illustrate the city’s
resilience and appeal to commercial, group and leisure travelers, as
the market rebounds quickly from periods of decline. For example,
hotel performance among Manhattan’s upper upscale and luxury
properties recovered strongly in 2010 and 2011 with RevPAR growth
of 10% and 8%, respectively.5
RevPAR growth, while remaining positive, slowed to 3.8% in 2012,
driven by occupancy increases of two percentage points and an ADR
rise of 2%. While Manhattan experienced higher demand increases
than the national average in 2012, the city’s elevated supply additions
tempered RevPAR growth.
In 2013, RevPAR increased by 4.3% due to demand growth from the
transient and group segments. Furthermore, citywide demand for hotel
room nights reached 32 million sold rooms, an increase of 4.5% on 2012
which compares to national demand growth of a lower 2.2%.
In 2013, visitation to the city also reached a record high of 54.3 million
people. This marks a 1.6 million person increase from 2012 and a 20
million person increase in the number of visitors since 2002.6
In 2014, Manhattan hotel performance is poised for continued growth.
However, with substantial new hotel rooms anticipated to enter the
market, especially in Lower Manhattan, RevPAR growth is anticipated
to be more muted and mostly driven by rate. We expect RevPAR for
the city’s upper-tier hotels to increase from 3%-3.5% in 2014, mainly
driven by an increase in rate.
New York MSA occupied room nights
35,000,000
30,000,000
Annual occupied room nights
Robust demand growth expected in 2014
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
-
2007
2008
2009
2010
2011
2012
2013
Source: Smith Travel Research
Manhattan will continue to benefit from robust increases in international
tourism, especially from Brazil and China, as well as unrealized visitation
from other emerging markets in Asia, South America and Europe. As
indicated by the Mayor’s office, the city is on pace to reach 55 million
annual visitors during 2014.
Even when considering the impending new supply, the diversification
of demand will be a driving factor in investors’ strong sentiment for the
market. The city’s strength, durability and resilience have positioned
Manhattan as the top U.S. hotel investment market offering a large
range of high quality lodging stock. This will continue to attract
significant attention from domestic and international investors, brands
and operators seeking to establish or grow their foothold in New York.
New York lodging performance, selected upper-tier hotels
$400
100%
$350
80%
$300
$250
60%
$200
40%
$150
$100
20%
$50
$0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
ADR
Note: Data is based on City: New York | Chain Scales: Upper Upscale, Luxury, Independents in Luxury Class
Source: Smith Travel Research 5
6
Smith Travel Research
NYC.go – Office of Mayor Bloomberg
RevPAR
Occ
YTD YTD
Q1
Q1
2013 2014
0%
April 2014 | Hotel Intelligence New York 11
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