NYC hotel occupancy rate crashes toward 10% as permanent closures loom

Prices at New York City hotels have plunged as the hospitality industry continues to try and grapple with the effects of the global pandemic.

Some hotels, like the Midtown Hilton, have remained closed since March. Others, like the Pierre, are operating in limited capacity. Those that are open for business have slashed prices by more than 60%, according to a new writeup by AlJazeera.

Despite October usually being a fruitful month for tourism in NYC, coronavirus has forced the cancellation of staple events like the NYC Marathon and Fashion Week. And while the industry has definitely recovered since March, it still has a long way to go. 200 of New York’s roughly 700 hotels remain closed, the article notes.

Lukas Hartwich, an analyst at real estate research firm Green Street, said: “Next year is going to be far worse than any year we’ve ever had except this one. It’s going to be 2022 before we get back to where we were during the worst part of the last recession.”

Occupancy rates in NYC stand under 40% right now, with the average daily room price at $135. Those figures, last October, stood at 92% and $336. Industry locals say the 2020 figure may even be inflated, as many hotels stopped reporting data for the time being.

Vijay Dandapani, chief executive officer of the Hotel Association of New York City, said: “The true hotel occupancy is less than 10%. Hotels have theoretically been able to be open, but in many cases it’s pointless.”

In addition to risk-adverse travelers, corporate travel has also diminished, acting as a major headwind for the industry.

Executives in the industry predict that up to 20% of the city’s hotels could wind up permanently closed. Those that have stayed open, like the Pierre, are offering limited services. For example, at the Pierre, room service stops after breakfast and the concierge clocks out at 5PM now.

Some hotels have even contacted the Department of Homeless Services to try and “convert properties into temporary shelters”.

There have been shades of optimism elsewhere, however. Heading into the summer, Americans started traveling to beach locations against again, with places like Virginia Beach and Panama City seeing sustained hotel recoveries.

Dan Peek, president of the hotel group at advisory firm Hodges Ward Elliott, concluded: “It would be a bad bet to say that New York isn’t going to come back. But it does face some unique challenges that will likely result in a slower recovery.”

Originally published on Zero Hedge.

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