Weak Fundamentals, Supply Flood And Slumping Travel Make NYC No. 2 Hotel Sell Market
NYC’s hotel market has been soft for months, but we have some bad news for those expecting it to turn around.
Despite a soaring economy, NYC’s weak fundamentals, increasing Airbnb competition and seemingly endless flow of new supply have not only caused room rates and revenue per room to decline year-over year, but made the Big Apple the US’s No. 2 hotel “sell” market, according to a Ten-X report.
Not helping matters, the report notes, is slumping international travel in the wake of Brexit and declining business travel with the increasing adoption of video conferencing. Ten-X projects that occupancy in NYC will drop to 83% by 2018 and to 78% in 2020.
Houston is the only city above NYC on the index, followed by Pittsburgh, San Jose, CA, and Northern New Jersey. Las Vegas, Jacksonville, FL, Sacramento, CA, Los Angeles and Indianapolis were the top “buy” markets, thanks to strong economies, demand and healthy supply growth.
Overall, the US hotel market saw 1.7% of total supply growth and 1.6% demand, making it the second time in the last three quarters that supply outpaced demand. Room rates still rose 1.2%.