The city’s hotel industry is in free fall as occupancy and room rates have plunged and a growing number of chains have shuttered locations due to a dramatic drop-off in business as a result of the coronavirus crisis.
Widely-watched data from the hotel market-tracking firm STR released on Wednesday afternoon showed that occupancy fell to 49% last week, a decline of 44% from the same week a year ago, the firm reported. The average room rate for the week was $180.93, according to STR’s data, a 19% drop from the room rates during the same week a year ago.
Although March is generally considered part of a slow season in the hotel industry at the beginning of the year, the average occupancy rate for the month in NYC over the last 30 years has been 79%, STR reported, a historical average that brings into context how much the market has deteriorated in recent weeks.
Because of the lag, the figures don’t account in full for the continued alarming decline of the financial health of the hotel industry this week. Employees at several major hotels that were interviewed by Crain’s on Wednesday said they had occupancy numbers that had fallen into the single digits in recent days and either were shuttering to wait out the crisis or were contemplating a shutdown.
“We’re bleeding as far as occupancy goes, all hotels are right now,” an employee at the glitzy hostelry the Gramercy Park Hotel told Crain’s. “We’re in the single digits in terms of occupancy. I’ve never seen anything like it.”
The person said the grand hotel, which is owned by the large landlord RFR Realty, was contemplating a shutdown.
“We’re taking it day by day,” the person said.
An employee at the prominent Meatpacking District hotel, the Standard High Line, said it would likely be closing until April 30th to try to wait out the crisis and because there are too few bookings. An employee at Midtown’s 426-room, tourist-focused Warwick Hotel said that it had stopped taking reservations until May 11.
“It’s a nightmare,” the person said. “It’s a ghost town.”
The employees did not want to be identified because they had not been authorized to speak to the media by their managers.
The city’s largest hotel by room count, the nearly 2,000 room Hilton New York on Sixth Avenue, also announced it was closing on Friday to wait out the crisis.
“As a result of the novel coronavirus, the hospitality industry is experiencing an impact to business that will require New York Hilton Midtown to temporarily suspend hotel operations as of March 20,” a spokeswoman for Hilton said. “This is a temporary measure that is reflective of the current business environment.”
The spokeswoman suggested that Hilton could shutter other locations it operates in the city.
"In terms of other hotels temporarily suspending operations, this is an unprecedented situation," the spokeswoman said. "Our leadership team is working with each hotel and evaluating options on a case-by-case business."
The New York Hilton has 1,386 employees. The hotel has not made any decisions about layoffs, which are part of the city’s hotel union, the Hotel Trade Council.
“Many of the major hotels are in the process of closing their doors and we expect to see thousands of hotel workers jobs lost, either through furloughs or layoffs, over the coming weeks,” an HTC source told Crain’s.
Although there was still hope that the virus can be controlled and the economy repaired in the coming months, hotel experts were already predicting that 2020 could be the worst year ever for the city’s hotel industry.
“These are absolutely terrible occupancy and room rate numbers,” said Sean Hennessy, an assistant professor at New York University expert in the city’s hospitality industry. “If the annualized occupancy number for the hotel market sinks to 70% or below, it would be the worst metrics we’ve ever seen.”
Earlier this week, Comptroller Scott Stringer released ominous projections for the damage the virus could inflict on the city’s economy, predicting that occupancy rates for hotels could sink to as low as 20%.
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March 19, 2020 at 01:06AM
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A growing list of hotels such as the New York Hilton and Standard High Line are closing amid the coronavirus crisis - Crain's New York Business
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