NEW YORK, February 22, 2005 - According to the PricewaterhouseCoopers Hospitality & Leisure practice, strong local economic growth combined with an increase in business travel and international arrivals will lead to the continuation of robust revenue per available room (RevPAR) growth for Manhattan hotels in 2005 and 2006.

In 2004, Manhattan hotel occupancy increased by 7.3 occupancy points to 83.2 percent and average daily room rate (ADR) increased by 10.8% to $201.76, leading to RevPAR growth of 22.0 percent, compared to prior-year levels, according to Smith Travel Research.

In 2005, the Manhattan lodging market will continue to achieve impressive RevPAR growth as occupancy advances to 84.9 percent and ADR advances by 10.8 percent to $223.65 for a total RevPAR increase of 13.1 percent. In 2006, occupancy is expected to reach 85.1 percent, leading to ADR growth of 9.5 percent to $244.79. 

In 2000, average daily room rate peaked at $222.60 and occupancy reached 83.7 percent.
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1. Both leisure and business demand will continue to respond to strong national economic stimulus, as U.S. GDP is forecast to expand at 3.7 percent in 2005, above the trend growth rate of 3.5 percent, and New York City gross metro product is forecast to increase by 2.2 percent in 2005 and 2.1 percent in 2006.
2. The recovery of suppressed business travel from the low levels in 2002 through early 2003 will continue. For example, office leasing by large financial services firms and the renewed construction of large commercial office buildings (over one million square feet) indicate continued growth in service-sector employment.
3. The increase in air passenger arrivals to New York City due to an improvement in the number of international arrivals and the expansion of domestic airline routes is expected to continue in 2005 and 2006. Total air passenger arrivals to the major New York City airports surpassed 2000 peak levels in 2004, and the number of area international arrivals is expected to surpass 2000 peak levels in 2005 after declining nearly 10 percent between 2001 and 2003.
4. Manhattan hotel supply is forecast to increase by only 0.8 percent in 2005 and 1.4 percent in 2006. The number of rooms in Manhattan hotel projects currently under construction totals 2.1 percent of existing Manhattan hotel room supply, according to Smith Travel Research / McGraw-Hill data. However, record prices for residential housing will lead to additional conversions of existing hotels to condominiums or cooperative apartments. PwC's forecast of 64,900 Manhattan hotel rooms at the end of 2005 is only 3.1 percent above the 62,900 rooms that existed in Manhattan at the end of 2000.