Industry Update
Opinion Article30 August 2016

Horwath HTL Americas Presents a Manhattan Special Market Report

* By the End of 2016, ADR and RevPAR Could Rebound Sooner than Expected. * Supply Growth Remains Strong Focusing on Independent and Upscale Sectors.

By Paul Breslin, Managing Director at Horwath HTL

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Horwath HTL, a global leader in hospitality consulting, has released its Manhattan Special Market Report, and report that despite a decrease in Occupancy, ADR and RevPAR are expected to increase by the end of 2016. Additionally, pipeline projects have been outpacing the demand growth focusing in on the independent and upscale sectors, which already cover more than half of the market share. According to Paul Breslin, Managing Director of Horwath HTL Atlanta, Georgia, and author of the Manhattan Special Market Report, "By the end of 2016, the declining trend in Occupancy, ADR, and RevPAR for the past three years is expected to slow down. ADR is predicted to come back in 2017 with a growth rate of 1.7%, and RevPAR can be driven up compared to 2016. Due to the continued influx of supply into the city, the demand rate can still be expected to fall short of the supply rate." Among the other notable highlights featured in Breslin's report:

  • Development is booming in Manhattan. Strong supply growth in the first half of 2016 led it to outpace demand growth, which contributed to the decline in Occupancy. This decline initially occurred in 2015, but has remained steady in the first quarters of 2016. Other key performance indexes, including ADR and RevPAR, have also dropped in the past year; though remain steady with hopes of improvement by the end of 2016. Occupancy currently sits at a healthy 83.7%, and ADR is $254.72.
  • According to Smith Travel Research, there are currently 410 hotels in Manhattan, totaling 93,616 rooms. Economy and midscale hotels make up the smallest percentage of the market, and independent and upscale sectors represent over half of the market at 60.5%. As of June 2016, there are 91 hotels and 19,402 rooms either in the planning phases or under construction. Among those properties, independent hotels make up the majority, indicating a dominant presence in the future Manhattan market. Most of these developments are located in Midtown or the Lower Manhattan area
  • The majority of investment in the Manhattan hotel market has been coming from cross-border groups, followed by institutional groups, public listed groups or REITs, and private groups.
  • In the past two years, the top five buyers in the Manhattan hotel market were Anbang Insurance Group, Lotte Group, ADIA, Blackstone, and Maefield Development. Conversely the top five sellers in the market were Hilton Worldwide, Blackstone, Northwood Investors, Highgate Holdings, and Goldman Sachs.
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Related Document

Special Market Report, Issue 71: Manhattan

Paul Breslin and Julia Zhang of Horwath HTL Atlanta, GA, USA, have written our latest Special Market Report, focusing on Manhattan’s hotel market. Clearly NYC has been in the news all year, “decelerating Revpar”, “adverse supply growth”, and of course the ever growing buzz of Airbnb. The city that never sleeps may absorb the new supply and have a rebound sooner then we think, or will the demand slow and supply increase even more? Will the demand continue to grow? The Horwath HTL NYC 2016 mid year market update may surprise you.
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