Manhattan Daily Hotel Rates Reverse Long-Held Upward Trajectory

Bulletproof for years, Manhattan's daily hotel rates have reversed course dramatically in the aftermath of Wall Street's economic meltdown, with January rates dropping more than 11 percent, year over year. The increasingly fragile market, buffeted by sharp corporate travel reductions, will further be stressed by the scheduled introduction this year of 38 properties totaling more than 7,800 rooms in the borough alone.

The Richmond, Va.-based Lodging Development Group's 2009 Manhattan Lodging Development Report identified "17 properties comprising 3,074 rooms that are now in permitting or the final stages of entitlement, and an additional 21 properties comprising 4,930 rooms that are proposed or in early permitting" in the borough.

The scheduled properties, all of which would be below 57th St., comprise a mix of full- and select-service hotels, with a handful of boutique and extended stay properties on tap as well.

Such an influx of supply would dwarf Manhattan's development in 2008, a year when 12 properties, totaling 1,732 rooms, opened, said Lodging Development Group principal Jack Elsner.

The 2008 properties, all located below 42nd St., largely are midprice and limited-service—including two Hampton Inns, a Four Points by Sheraton and a Hilton Garden Inn-—along with a few boutiques and two full-service Wyndhams.

The new supply will compete for an increasingly scarce number of corporate and leisure travelers. January Manhattan occupancy plummeted more than 16 percent, year over year, but officials said the concurrent rate drops were a more important barometer.

"I'm more concerned about the room rate than the occupancy, because hotels invest tens of millions of dollars maintaining their properties to ensure that they are world-class," George Fertitta, president of NYC & Co., the city's convention and visitors bureau, told Bloomberg last month. "When there's erosion to their rate, it affects their ability to do that."