By Eric Grossman
Throughout the COVID-19 pandemic , New York City’s hotels have navigated one hurdle after the next, and with the holiday season upon us, few are expecting the challenges to end anytime soon.
“Everyone is in the same boat, however some of us are managing to ride the rapids better than others,” said Mujo Perezic, general manager of The Kimberly Hotel in Midtown Manhattan. “We have to remember that many hotels have not yet reopened and some never will, so the level of challenge varies from one hotel to the next.”
Fortunately, visitor numbers are trending upward, and while things aren’t quite what they used to be pre-pandemic for both tourist and leisure travel, New York City’s $50 billion tourism industry has been buoyed by a number of major developments, including the return of Broadway shows in September and the reopening of borders to international visitors in November.
Anchoring a sense of optimism and excitement across the local hospitality market is the crucial holiday season, which—barring any new restrictions surrounding the spread of the omicron variant—is shaping up nicely, much to the surprise of some hotel operators.
“It’s remarkable how the environment has evolved throughout the year,” said Mitchell Hochberg, president of Lightstone, a real-estate investor and developer whose portfolio includes three New York properties: Moxy Times Square, Moxy Chelsea and Moxy East Village. “Back when we were locked up at home in January, if you had told me all of our New York City hotels would be 100% occupied throughout the month of December, I would not have believed you.”
A make or break season for the hospitality industry
As with pre-COVID times, the 2021 holiday season is proving to be the most anticipated time of the fiscal calendar, with hotels hoping a successful December will make up for earlier losses in the year.
“The fourth quarter overall is the most crucial for the hotel,” explained Pradeep Raman, general manager of the Baccarat Hotel, which sits across from the Museum of Modern Art in Midtown. “We expect to be full pretty much through all of December, and for the Christmas holiday we will be busier than we historically have been.”
Commonly heard among hoteliers are stories of travelers eager to make up for lost time while reuniting with family or experiencing the holidays in New York.
“We draw visitors in from everywhere no matter the season, but this winter will be one for the books,” said Hochberg, who is opening Moxy Hotels next year in Williamsburg and the Lower East Side. “People haven’t been able to celebrate in Manhattan for the ball drop in over two years, or go to Broadway shows, and now they can again.”
NYC & Company, the city’s marketing, tourism, and partnership organization, projects around 36 million international and domestic visitors for 2021—down from 66.6 million in 2019, but an improvement from 22.3 million in 2020. The city is heavily investing in this recovery and promoting inbound visitors through different market promotions and travel campaigns. Domestic travel is expected to return almost to pre-pandemic levels by 2023, but the outlook for business travel remains softer, with most industry data pointing to 2024 or later for a full recovery.
Figures provided by the Hotel Association of New York City demonstrate just how damaging the pandemic has been on the local hotel industry. NYC hotel occupancy for 2020 ended at 46.8% compared to 86.3% for 2019; the average room rate for 2020 was $151 compared to $254 for 2019. The association expects total occupancy numbers for 2021 to come in around 55%, with an average room rate around $175.
“We don’t expect a return to pre-pandemic levels until 2025, as conferences and conventions have a long horizon for booking,” said Vijay Dandapani, president and CEO of the hotel association, which represents nearly 300 hotels with more than 80,000 rooms and approximately 50,000 employees. “Furthermore, business travel is at about 25% of pre-pandemic levels, and very few corporations are permitting travel.”
The struggle to return NYC’s hotel industry to its pre-COVID glory
Beyond the owners and stakeholders anxiously waiting for occupancy numbers to rebound to pre-pandemic levels, there are industry players such as hotelAVE, a consultancy made up of former hotel owners, operators, and financial professionals that provides asset management and advisory services to lenders and owners of hospitality assets.