The NYC hotel industry is showing signs of life as the pace of vaccinations in the metro area quicken and federal stimulus funds shore up the sector.
A new report from CBRE predicts an average occupancy level of 43.3% during the first half of this year, an increase from the 35% recorded in 2020, and a 74.3% occupancy rate, on average, for 2022. A return to normal is within sight, with CBRE analysts forecasting 86.4% occupancy by 2025.
The Average Daily Rate should increase by 21.2% this year and by 26.1% next year, according to the report, while revenue per available room (RevPAR) is predicted to increase by 50.1% this year and by 116.3% in 2022. Many properties in the New York City area should see RevPAR gains of more than 50% during 2021, and demand increases by more than 30%. (By comparison, demand decreased by 59.5% in 2020.)
“New York City is now starting to experience an economic rebound as shopping, entertainment and other businesses are opening their doors once again after a year of multiple closures and stay-at-home orders,” said CBRE’s Mark VanStekeleburg. “With the accelerated pace of vaccinations, we will continue to see tourism rebound and the hotel industry come back to life in the second half of 2021 and beyond. We are forecasting that the lodging industry should be crossing 80% occupancy in the third quarter of 2022.” The recent $1.9 trillion federal stimulus package should also continue to boost lodging demand, with higher-priced properties growing faster this year than mid- and lower-tier properties. CBRE is calling for a return to 2019 RevPAR levels in 2024, and notes that in general, lower-priced chain-scale properties will recover sooner than the higher-priced hotels.
CBRE estimates that hotel supply growth will remain below 1% through 2023.