Manhattan Hotel Market Is Strongest It Has Ever Been; Occupancies Increase and Rates Remain at Record Highs

Both average daily rate and occupancy approached growth rates of 8.0 percent, which created double digit RevPAR (revenue per available room) growth. Manhattan's occupancy rate at midyear was 89.2 percent, up from 82.9 percent a year earlier. Average daily rate at midyear was $215.55, up from $200.23 a year earlier (the national average daily rate is $84.51). Revenue per available room grew from 9.8 percent in the first two quarters of 1999, to 15.9 percent in the first two quarters of 2000.

The factors contributing to the strength of Manhattan's lodging market include: the robust economy where GDP has grown at a 5.2 percent annual rate this year, an undersupply of rooms to accommodate 36 million annual travelers to the city each year, and a continued strong mixture of business, leisure and convention business.

Neighborhoods of particular note in Manhattan include Midtown East, which has shown near exponential RevPAR growth. For the six months ending June 2000, Midtown East hotels have posted an 18.5 percent growth in RevPAR over 1999. Upper Manhattan, which includes Central Park hotels, continues to lead the Manhattan hotel market in average daily rate.

"The outlook for the Manhattan hotel market is exceptionally bright," said Sean Hennessey, New York director, PricewaterhouseCoopers Hospitality & Leisure Practice. "We do not anticipate the higher rates nor the difficulty in securing rooms will dampen travelers' enthusiasm for the city. We expect demand to remain strong throughout 2001."

PricewaterhouseCoopers is the leader in econometric modelling and providing reliable U.S. lodging industry forecasts that offer true industry-wide samples based on proven econometric models. The group predicted every industry turning point in the last ten years, usually two years in advance of each market move.

In July 1991, PricewaterhouseCoopers predicted a return to profitability for the industry in 1993, and average daily room rates surpassing inflation. In April 1996, PricewaterhouseCoopers issued an early alert that there would be an occupancy decline in 1997. In October 1996, the firm predicted occupancies would decline in 1997.

The firm's research models have recently been refined and enhanced to improve the estimation of future room starts, to enable more precise estimation of the interactions between lodging statistics and the marcroeconomy, and to provide reliable estimates of future lodging statistics of the U.S. at the industry segment, the regional, and the local market level.

Recently, PricewaterhouseCoopers applied similar econometric modelling techniques to the local level and can now offer forward-looking Market Outlooks. These local forecasts rely on extensive lodging data collection, empirical studies and solid econometric models to support all positions and conclusions. The Market Outlooks are patterned after the structure of the U.S. industry econometric model.

PricewaterhouseCoopers Hospitality and Leisure Group provides services including management, technology, human resources and financial consulting in North America, Europe, the Middle East and Africa. The group recently formed a partnership with Smith Travel Research.

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