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Spending the night: NYC vs. U.S. hotel market
Chasm between daily rates at city hotels and rest of the country continues to grow
By The Real Deal Staff
2 July 2007

Source: Smith Travel Research; data is for April 2007 The room rates charged by New York City hotels have outstripped their closest competitors nationally -- to such an extent that only the top international markets can serve as worthy benchmarks.

In April, the average daily rate charged by hotels in New York City was $254.05, an increase of 11.1 percent over April 2006, according to data from Smith Travel Research.

After New York City, the top U.S. markets were Miami-Hialeah, Fla., at $167.12, and Oahu Island, where Honolulu is located, which had an average daily rate of $160.74. Both had grown just over 4 percent from the previous year.

"New York is obviously the measuring stick for all the top U.S. markets," said Nolan Hecht, director of the hotel transactions group at Cushman & Wakefield. "Looking at it globally, the average daily rate numbers are in line with the top markets in the world -- London, Paris and Dubai."

In April 2007, London had a daily rate of $216.69 in a 12-month running average; Paris had a rate of $228.94; and Dubai's rate was $232.56, compared with New York City's $254.05.

The spread in terms of average daily rate between New York City and the rest of the country has been growing, said Bjorn Hanson, a leader of the hospitality and leisure practice at PricewaterhouseCoopers.

"What's interesting is Honolulu is a year-round leisure and business destination, and New York City is the same," he said. "That's the key: having year-round demand and seven-day-a-week demand."

Las Vegas may be the only other U.S. market that has similar dynamics, Hanson said, though most of the business travel there consists of convention business, as opposed to individual business travelers.

Las Vegas did not make it onto Smith Travel Research's list of the top 25 hotel markets in the United States for April 2007.

After New York, Miami and Honolulu, the U.S. markets with the highest average daily rates in April were Washington, D.C., Maryland and Virginia at $154.43; Boston at $148.36; San Francisco/San Mateo at $140.70; and Phoenix at $137.53.

Norfolk/Virginia Beach, Va., at $83.74 a day, rounded out the lineup at No. 25.

New York City had the third-fastest growing average daily rate, at 10.5 percent, topped only by Denver at 11.3 and Miami-Hialeah, Fla., at 11.2 percent. Detroit's hotel market saw its average daily rates shrink, with a loss of 5.1 percent.

New York City's occupancy rate, at 86.2 percent in April 2007, outpaced the national rate of 60.8 percent, a spread that has remained constant for many years, Hanson said. But that may change in the future: No other U.S. market has as many prospective hotel projects as Manhattan, with the possible exception of Las Vegas, he said.

An anticipated 15 percent increase in the supply of New York hotel rooms in the next five years means the city's occupancy rate should decline, though it could still remain as much as 20 percentage points above the national average, said Hanson.

Hecht said he doesn't believe that the strong demand for hotel rooms in New York City will change any time soon.

"You could slap another 10,000 rooms in New York and really not feel much of a bang," he said. "Some of the other cities in the U.S. are having similar growth, but nobody has the dynamics that New York City has -- the combination of financial and leisure travel, and international travel."

New York City "is by far the front-runner and, in some terms, a bellwether as to how the rest of the country is going to do," he said.

When it comes to hotel investment, New York City is a leader, though this past year has seen the sale of several large nationwide hotel portfolios and privatizations of large hotel groups -- neither of which have touched Manhattan to a large extent, said Jared Hirschkorn, an associate at Real Capital Analytics, a research firm.

More startling is that there have been about $41 billion in hotel sales nationwide to date in 2007, or roughly the first six months, while in 2006 there were $39 billion in hotel sales for the entire year, he said.

In Manhattan, there have been $1.4 billion in hotel sales this year to date. That has not surpassed last year's tally, but it is on pace to tie or slightly exceed it by the end of the year, he said.

"Another place we've seen a lot of activity is Las Vegas," Hirschkorn added. "We have almost $5 billion in deals there this year. It's the largest city by dollar volume -- though not by number of transactions -- just because there have been a few huge deals there."

Chicago has also seen hotel sales activity surpassing that of New York City, though that is nothing new, as the two cities have been neck and neck the past few years. Thus far in 2007, Chicago saw 63 properties sold (for a total of $1.95 billion), while Manhattan registered only 10 properties sold.

"The Chicago market is a little bigger geographically, which brought in a lot of those limited-service, extended stay properties" in portfolios that were sold, Hirschkorn said. "If you took those transactions out, Chicago might be on a par with Manhattan."
 

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And your point being p-s-30? I'm sure there are similar hotels in other cities.
It will be so.
But a construction boom of a high-quality hotel is happening in Tokyo.
Probably I think that there is much number of highest-quality hotels in the world.

The luxury Hotel that opened in Tokyo after 2002.

: Four Seasons Hotel Tokyo at Marunouchi.
: THE RIHGA ROYAL HOTELTOKYO.
: GRAND HYATT TOKYO.
: Tokyo Prince Hotel Park Tower.
: Mandarin Oriental Tokyo.
: The Peninsula Tokyo(9. 2007).
: Shangri-La Tokyo (2009).
: INTER CONTINENTAL HOTEL.
: ANA Inter Continental Hotel.
 

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Discussion Starter · #8 ·
It will be so.
But a construction boom of a high-quality hotel is happening in Tokyo.
Probably I think that there is much number of highest-quality hotels in the world.

The luxury Hotel that opened in Tokyo after 2002.

: Four Seasons Hotel Tokyo at Marunouchi.
: THE RIHGA ROYAL HOTELTOKYO.
: GRAND HYATT TOKYO.
: Tokyo Prince Hotel Park Tower.
: Mandarin Oriental Tokyo.
: The Peninsula Tokyo(9. 2007).
: Shangri-La Tokyo (2009).
: INTER CONTINENTAL HOTEL.
: ANA Inter Continental Hotel.

All of those hotels already exist or are under construction in NY. The same holds true for London and, to my knowledge, Paris.
 

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In April 2007, London had a daily rate of $216.69 in a 12-month running average; Paris had a rate of $228.94; and Dubai's rate was $232.56, compared with New York City's $254.05.
Seems like it's NY, Dubai and Paris from that sentence
not NY, London and Paris
 

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^^ In the case of Dubai the (increase) in numbers of visitors is the main reason why Dubai is so high up on the list. However it must be mentioned that the percentage of 5 star hotel rooms (compared to the overall number) is higher then in most other cities.
 

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Paris is a one heck of a city. I love those neo-classical buildings and my wife don't want to leave :lol: We spend so much money for the hotel but its worth it because thats where we made our second baby (After two years of effort). The hotel and whole city got the best customer service but the taxis looks awful or plain and the traffic is bad. Overall, Paris, even though expensive, deserves it.
 
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