Rising Hotel Rates Hurt New York Tourism
Oct. 3, 2006. The rising hotel rates in New York have started keeping visitors away, leaving experts to worry whether the city's tourism boom will grind to a halt, according to an article in Crain’s New York Business. Owners of luxury vacation rentals should learn from the New York experience.
The article by Lisa Fickenscher reports, “For the first seven months of this year, hotel occupancy fell 1.2% to 83.8%, compared with the same period in 2005. At the same time, the price for a room has soared. The average cost of a hotel room in the city rose 11% to $241, according to PKF Consulting. This fall, the average room rate is approaching $300.�
These statistics conform to a national pattern of lower occupancy rates in other areas. As we have watched the weekly reports of Smith Travel Research, we have noticed a decline in occupancy rates in recent weeks. In most cases, hotels have been able to achieve higher revenues with higher rates. However, the period when visitors will accept continued higher rates may be at an end.
The Crain’s article goes on to report that much of the price resistance is occurring at budget and middle-market properties. “Hotels that appeal to price-conscious travelers -- those that charge anywhere between $125 and $175 a night -- have had the biggest room rate increase. Rates at such properties rose 15.5% during the first seven months of this year, according to PKF Consulting.�
As we saw hotel rates in New York and other prime destinations soar this year, we have often commented that eventually there would be resistance and a great opportunity for moderately-priced luxury vacation rentals. This seems to be already happening.
