New York City Sees Hotel Boom Despite Room Occupancy Decline

Nearly 40 new hotels will open in New York City in 2009, including the Standard, the Ace, and the Cooper Square hotels, adding hundreds more to New York City’s existing 85,000 guest rooms. In a seemingly odd time to be expanding, New York is seeing a hotel room boom with more lodging than ever before.
New hotels projected to open in 2009 had been in the works as hotel occupancy rates steadily climbed in the last five years, often causing room shortages, with 39.9 million visitors in 2004 to a record 47.1 million in 2008. However, the suffering economy ended the climb with a dismal last quarter in 2008. Not only has there been a drop in room occupancy, but room rates as well.
According to PKF Consulting, 2008 had an average daily room rate of $268.59, while 2009 had a rate of $220.42. The average occupancy was 81.0 percent in the first quarter of 2008, while the first quarter of 2009 saw 67.3 percent, a number dipping into dangerous territory.
Travelers aren’t reserving rooms as far in advance anymore, and business expense accounts are being tightened to not include as much business travel. Hotels will have to offer good prices and incentive packages to gain guests.
The aforementioned chic and innovative new properties offer a glimmer of hope. The Standard has floor-to-ceiling glass windows providing amazing Hudson River views from its location on Washington Street, while the Cooper Square captures modern luxury with its sharp interior, and the Ace rocks a Indie/hipster flair.