In 2011, Manhattan hotel investments rebounded quickly and a similar trend is expected to happen in 2012. Although it must be noted that NYC hotel investment is more than the latest trend. The Big Apple has always been a consistent market for the hospitality industry. CBRE's Winter 2012 Snapshot on the NYC hotel market pointed to a dynamic and well-performing sector.
According to Bradley Burwell, senior associate, CBRE Hotels, fundamental lodging performance will maintain its strength. Even though over 4,100 guest rooms were added to Manhattan during 2011, occupancy rates remained the same at 84 percent. New York City can continue to absorb the new supply of extra units.
CBRE reports that limited-service as well as focused-service hotels flagged by popular brands have performed well in recent months. Limited-service hotels make up 20% of the inventory - compared to 17% of inventory in 2006. During the past few years, performance for limited-service hotels has outperformed full-service hotels with current occupancy showing an increase for full-service hotels. The Average Daily Rate (ADR) gap has fallen 5% (from 23% to 18%) between 2007 and 2011.
Additional CBRE findings include:
- Manhattan hotel investment sales activity rose considerably in 2011. Twenty-seven hotels were traded for $3.8 billion - more than twice 2010 numbers.
- In 2012, Manhattan hotel investment sales transaction volume will stay high, fundamental lodging should continue to be strong, and the capital markets will show an improvement. Manhattan hotel capitalization rates are expected to be stable at historically low levels and investor demand will continue to be a huge factor.
- During 2012, the New York metro area hotel occupancy rate will rise 60 points to 81 per cent. ADR will increase 4.5% to $243. Revenue per available room (RevPAR) will increase 5.4% to $197.
- In 2012, national hotel occupancy will remain the same at 65.9 per cent. ADR will rise 3.8% to $123. RevPAR will increase 3.8% to $81.
- Despite the extra 4,100 hotel rooms in Manhattan during 2011, RevPAR rose 5.6% to $232. Occupancy rates stayed the same at 84 per cent. ADR rose by 5.7% to $276.
- Current additions of high-quality limited- and focused-service hotels flagged by well-known brands have resulted in 24% limited-service RevPAR growth - compared to 18% full-service RevPAR growth over the last three years.
- Manhattan full-service and limited-service occupancy rates are much the same figures. Limited-service hotels comprise 20% of the inventory - compared to 17% of inventory in 2006.
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