The coronavirus’ impact on global travel is sending tremors through New York City’s hotel industry, which was sagging from declining occupancy and revenue even before the China-originated pandemic struck.
With some luck, the spread of the virus will be tamed by the time a bunch of major new projects are completed — among them, the Riu Plaza on West 47th Street, Hard Rock on West 48th and the Virgin on Broadway at 28th Street.
But it’s nail-biting time for owners — which are usually real estate companies not to be confused with the hotel brands whose flags they carry.
“It’s a human tragedy that is also a potential disaster for those of us in hotels, especially at the Manhattan high end,” one nervous general manager who didn’t want to be named told Realty Check.
Cushman & Wakefield managing director and head of global hospitality Tom McConnell said that Chinese visitors to the city were the market’s largest-growing segment over the past 10 years.
He said their numbers had continued to rise even after visa and trade-war issues began to slow the growth rate in 2018.
But the virus’ potential impact is “a kick,” he said, “although hopefully short-term.”
McConnell believes the full effect won’t be known for a few months. “So far, it’s a 60-day phenomenon. The travel ban hit in January and February, which are the slowest months for hotels,” he said. But things could be much worse if it continues into spring and summer, he added.
Foreign visitors to the city, both for business and leisure, spend much more on average here than domestic ones. Among international travelers, the Chinese spend the most on a per-person, per-trip basis, as Post columnist Nicole Gelinas noted last week.
The virus crisis came on the heels of a number of possible hotel mortgage defaults. The Wall Street Journal reported earlier this month that 21 mortgages backed by hotels were on a watch list, some since early last year.
The leasehold owners of the giant 1331-room Row Hotel near Times Square defaulted on a $260 million loan last year while the Williamsburg Hotel in Brooklyn is headed for receivership.
As we reported back on Dec. 30, all of the hotel business’ key benchmarks — occupancy, room rates and RevPAR (revenue per available room) — were down through last November compared with the first 11 months of 2018. McConnell said the loss to hotel owners was even worse than those numbers seemed because their taxes, labor and operating costs rose at the same time.
The dip occurred despite rising numbers of visitors, which hit a record 70 million in 2019, compared with 48.8 million in 2010. The culprit is oversupply. Due to an ongoing development surge, the city will have 144,000 hotel rooms by the start of 2022, compared with 87,000 in 2010.
Steve Cuozzo [NYPost.com]
Steven D. Cuozzo (born January 17, 1950) is an American writer and newspaper editor who writes as a restaurant critic, real estate columnist, and op-ed contributor at the New York Post, a daily newspaper primarily distributed in New York City and its surrounding area. A lifetime resident of New York, Cuozzo spent his career at the Post, working his way up from his entry-level copy boy position in 1972, through positions including copy editor in the newsroom, entertainment editor, assistant managing editor in charge of features, and executive editor. In 1996, he summarized his experiences at the Post in his book, It’s Alive! How America’s Oldest Newspaper Cheated Death and Why It Matters. As of 2013, Cuozzo writes as a restaurant critic, real estate columnist, and op-ed contributor at the New York Post and lives with his wife Jane on the Upper East Side.