This year New York City is expecting the greatest number of hotels to develop in several years. 44 new hotels are planning on being opened, which creates 7,561 new rooms, and 8.5% espansion in the city's room supply. (Hudson) These projects were started a couple years ago, but due to the economy, they had to be put on hold.
Usually when supply increases, room rates decrease since consumers have more options. Therefore, hotels drive down their prices to win guests. However, NYC hotel owners expect the prices to remain about the same.
Michael Depate, who owns four hotels in NYC stated, "About six months ago, every hotelier in New York was very worries about all of the new supply coming. But there has been such a resurgence of business travel that, even with all of the supply coming, we haven't had any troubles absorbing it."
Depate's statement shows the confidence hotel owners are having in the industry these days. This may be due to the 7.1% increase in occupancy rates this year. Revenue per available room has risen by 13.4%, and nightly rates have raised 3.1%. (Hudson)
This supply growth is not expected to last for very long. They suspect that next year it will decrease greatly. In conclusion, the hotels are not feeling pressured by the increase in supply of rooms. Room rates are expected to stay about the same and they are not expecting occupancy rates to drop much due to the increases in travel and RevPAR.
http://online.wsj.com/article/SB10001424052748704.html?KEYWORDS=new+hotels
I think it is great that companies can still manage to fit more hotels into NYC with the lack of available space. I can't believe that 44 hotels will increase the supply rate of rooms by 8.5% - that is huge!
ReplyDeleteBut I also think it's needed because the city has so many people in it at any given point. I also believe room rates will not fall because, like you said, there are more business people traveling to NYC again, as well as an overall increase in the occupancy rate. As far as I can remember, room rates in NYC have always been pretty consistent. I guess it depends where you are staying because well-known hotels (even new well-known hotels that have recently opened in NYC) always have a large clientele because of the name. I really do not think the hotel industry in NYC has anything to worry about.
That's pretty crazy that 44 new hotels are going to be opened in NYC in the next few years. New York has so many hotels to begin with I'm curious to see where they will add these new ones. I'm also curious to see whether they will be expensive upscale hotels or not. Also, we should also ask how much occupancy rates will increase.
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