�Manhattan is clearly one of the premier lodging markets in the world - both from the point of view of the quality of hotels and from sound fundamental market factors,� said Michael Fishbin, partner in charge of hospitality consulting in the New York office of  Ernst & Young Kenneth Leventhal.  �We see continued strength in this market, especially in light of apparent moves by the Office of the Mayor to further reduce or even remove the hotel occupancy tax,� he added.  Fishbin was referring to the Honorable Mayor Giuliani�s January 13, 2000 State of the City Address, in which the Mayor indicated that the hotel occupancy tax was one of a number of tax programs being looked at as part of a $2 billion, four-year plan to reduce the cost of doing business in the city.

New Construction Activity

The EYKL report also points to a relatively moderate level of new construction within the Manhattan lodging market.  �We might be seeing higher levels of construction given the fundamentals of this market,� says Georgianne Fsadni, a senior manager in EYKL�s New York hospitality practice, �but a constrained supply of capital for new hospitality projects last year seems to have kept new construction to a very realistic level,� she added.  The report indicates that eleven new hotels with a total of 3,702 rooms are currently under construction and expected to open before the summer of 2001, representing a 6.4% increase to the overall Manhattan lodging market.  An additional eight properties totaling 2,420 rooms are in planning and expected to come on line by 2003. 

As a result of the continued strong demand for rooms, upward trending room rates and moderate construction, the EYKL report suggests the city�s hoteliers will see another increase in Revenue Per Available Room (RevPAR) this year.  The report estimates that RevPAR will grow 1.7% in 1999 to $164.

Fishbin cited continued strength in both the tourism and convention business as two of the primary factors behind the continued strength of the Manhattan lodging market.  �The booming local economy has also contributed greatly to the overall performance of the hospitality sector,� says Fishbin.  �The strong commercial office market and expansion of many of the city�s leading companies and the emergence north of the financial district of Manhattan�s own �Silicon Alley� has clearly contributed to room demand.  We have cautioned for two years now that the availability of rooms for business travelers is often extremely limited and we see no reason for this to change in the immediate future even with the new rooms coming online, unless there is a severe turnaround in the national economy,� he added.

The report also includes the results of a snapshot Millennium survey of prominent hotel industry leaders conducted by the New York hospitality services group.  The survey cites famed hotelier and Titanic-victim John Jacob Astor and New York�s current hotel wunderkind, Ian Schrager, as the two most influential individuals in the city�s hotel industry in the 20th century and singles out the Four Seasons and the Plaza as the city�s favorite hotels. 

The E&Y Kenneth Leventhal Real Estate Group is a business unit of Ernst & Young LLP.  Ernst & Young LLP provides assurance and advisory business services, tax services and consulting for domestic and global clients.  The firm has 30,000 people in 87 U.S. cities.