Occupancy for the first four months of 2000 was 81.9 percent, a record high level, according to PKF Consulting, which has been tracking New York hotel performance since the 1920s.  Fox pointed out that the four-month, 74.5 percent level is only slightly behind that of 1999 when the City enjoyed an occupancy rate of 76.5 percent.

Fox indicated that the occupancy for the month of April showed a similar, although more negative trend.  �April 2001 occupancy of 78.1 percent was 13.2 percent below the level of April 2000, when occupancies at Manhattan hotels achieved a level of 89.9 percent,� he said. 

Fox emphasized that current occupancies, �while substantially below the record high level of April 2000, they are at a level that would make most hotel markets extremely jealous.�

These lower occupancies are the result of a combination of factors, reports PKF Consulting.  The primary factor is that New York City is experiencing a decrease in business travel.  Thus far this year, the City is beginning to feel the impact of the overall national economic slowdown.  This impact is being experienced most directly in a reduction in individual corporate business travel � businesspeople are either not coming to the City or staying for a shorter period.  However, there appears to be no significant drop-off in tourist travel. 

Also of influence is the increase in the supply of hotel rooms in Manhattan. In calendar 2000, Manhattan added a net of about 3,000 new rooms. �Anytime you have a 5 percent increase in the supply of rooms in one year, it is bound to have some short term impact on occupancies,� Fox explained.

PKF Consulting finds somewhat more concern in the trend in average daily room rates. For the month of April 2001, Manhattan hotels achieved rates of $219.27, 2.5 percent below those of April 2000 when the average was $225.00.  

�This is the first such decrease we have seen since July 1992,� reported Fox, �and is reflective of the drop-off in the higher-priced business travel segment for the period. Nevertheless,� he added, �average daily rates are at levels well above those of all major markets in the US.� 

Year-to-date for the four-month period, average daily room rates were up slightly to $214.82 from the same period a year earlier, when they were at $214.00.

�We expect that the month-over-month comparisons to 2000 will continue to show a downward trend until late in the third or early in the fourth quarter,� Fox explained.  �This needs to be put in perspective, however.  In each of the first nine months of 2000, New York hotels experienced occupancies that were at all-time record highs for those months.  It is unrealistic to expect that record high levels can be sustained for an extended period.  The basic laws of supply and demand, along with the cyclical nature of the economy and the hotel business all point to an inevitable slowdown.  Nevertheless, the industry in New York City remains very vibrant, and we expect it to continue to be so.�

PKF Consulting is an international consulting and real estate firm specializing in the hospitality industry.  PKF Consulting, along with The Hospitality Research Group and hotel brokerage affiliate Hospitality Asset Advisors Incorporated are all wholly owned subsidiaries of Hospitality Asset Advisors International, a U.S. Corporation.  The firm has offices in New York, Boston, Philadelphia, Washington DC, Atlanta, Houston, Dallas, Los Angeles, San Francisco, and Singapore.