New York Hotel Owners Cheer Recent Revival, But Are Wary of Possible Slump

Now, New York hotels are finally seeing a turnaround, according to lodging owners and industry analysts. Strong demand from leisure travelers boosted New York room rates well above prepandemic levels during the 2022 holiday season even as occupancy remains lower. Revenue per available room, a widely used industry metric, exceeded 2019 for three out of five weeks following Thanksgiving, according to hotel data-and-analytics firm STR. 

Group and business travel started picking up in the second half of the year, and hotel owners are reporting solid bookings heading into 2023. Overall demand for New York hotels improved this year but remained below 2019 levels by about 16% based on the total number of rooms sold as of Dec. 24, according to STR.

“Things, at least where we sit, look OK,” said

Richard Born,

whose company BD Hotels owns two-dozen properties across the city. But wary that strong leisure demand might moderate and economic and geopolitical turmoil may undermine future travel plans, he added, “Everybody’s sort of walking on eggshells a little bit.”

There are plenty of reasons beyond the economy and layoffs for hotelier caution. Rising interest rates are cutting into the profits of hotel owners with floating-rate debt. Inflation leaves Americans with less money for discretionary spending such as travel. The war in Ukraine and a strong dollar make travel to the U.S. more difficult and expensive for Europeans, while travelers from recently reopened China face Covid-19 testing requirements to enter the country. 

Still, New York’s hotel industry is in a much better position now than this time last year, when the Omicron variant torpedoed hopes for the holiday season and prompted widespread cancellations in the first few months of 2022. Some owners say recent business is booming. 

Mitchell Hochberg,

president of the real-estate company Lightstone and owner of four of

Marriott International Inc.’s

Moxy brand hotels, said Covid concerns largely evaporated this year. 

Lightstone no longer includes clauses in its event contracts that allow customers to reschedule due to outbreaks. Financial, entertainment and technology companies booked dozens of holiday parties this year that involved renting out the entire space at Moxy restaurants, clubs and rooftop bars, he said, and rooms for New Year’s Eve were selling at 50% higher prices than in 2019.

“The holiday season has been the strongest two-week stretch in the history of the portfolio,” Mr. Hochberg said.

Business travel is still slower than prepandemic but has started picking up steam. Corporate guests from the finance and technology sectors are booking rooms a month or two in advance, Mr. Hochberg said, with no signs of pullback despite the economic pressures facing both industries.

Luxury hotels performed particularly well. The Mark Hotel on the Upper East Side reported its strongest year on record from a revenue perspective in 2022, even as occupancy hovers below 2019 levels. Owner

Izak Senbahar

said his clientele, which includes people in the fashion and film industries as well as high-end business and European travelers, haven’t balked at rising prices since the pandemic. The Mark’s average daily rate in 2022 topped $1,900, a record for the company.

“It was a stellar year, really,” Mr. Senbahar said.  

Foreign visits, historically a big part of the city’s tourist activity, have still not fully recovered. International flight bookings to New York reached 77% of prepandemic levels in November and are on track to end December 18% lower than in 2019, according to travel-analytics company ForwardKeys. Domestic air travel to the city, by contrast, is nearly on par with prepandemic patterns.

Mr. Senbahar attributed the Mark’s occupancy rate of 65% this year to the slow return of luxury international travelers, but said he expects these guests to return over the coming two years.

“For a year or two you can stay in your backyard, but after a while you miss New York,” he said.

Write to Kate King at [email protected]