HX: The Newsletter Talks to Industry Analyst Mark Stekelenburg of CBRE about the NYC Hotel Market
With a New York City theme, this 9/11 issue focuses on everything related to the hospitality industry in the Big Apple. Mark Stekelenburg, managing director of CBRE Hotels Advisory, spoke with HX: The Newsletter Editor Laura Koss-Feder about the state of this dynamic and ever-changing hotel market and offered a glimpse into the very near future. Stekelenburg leads the company's Northeast and Mid-Atlantic practices and is based in New York City.
Q. What is the ADR and occupancy forecasts going forward for the New York City hotel market?
A. Keep in mind that we are coming off two very strong quarters, and March was one of the best months year over year. The ADR growth in quarters three and four of this year will be 2.7 percent; this number was 3.5 percent in quarter one and 3.7 percent in quarter two. We are predicting a year-end ADR of $262.82; that number was $255.39 for the same time last year. Occupancy for this year will be 87.1 percent, topping last year's highest recorded occupancy ever of 86.6 percent. New York continues to remain a very strong market, which is a reflection of group and transient travelers' desire to come to New York City - particularly leisure travelers.
Q. With numbers so strong, is this market impervious to almost anything?
A. Well not really. With new supply that will be coming on board, particularly next year, and the impact from Airbnb, we project the rate growth from 2019-2022 will be just between 1.5-2.5 percent. There will be the inability to push rate really far. There are 30,000 Airbnb rooms alone in New York City, and that does affect rate growth for hotels.
Q. Aside from the obvious--that New York City is a fun place to visit with a little of everything for everybody-why does leisure travel continue to remain so strong?
A. If we compare the city to other major international destinations like Paris, London, and Tokyo, this still continues to be a more affordable market if you factor in the rate of inflation. This is very much the case for overseas travelers coming here, but is true for domestic travelers as well.
Q. What else is impacting the market?
A.There are companies opening offices here, in places like Hudson Yards. And, areas like Long Island City and the financial district are seeing growth as well. This will bring even more business travelers to the area. They will be staying in Manhattan hotels, but there will be overflow to other areas as well, such as Queens and Brooklyn. You have areas like Williamsburg in Brooklyn, which has even become its own destination as an artistic community. There is also an investment in infrastructure, like the major expansion and renovation that is continuing at LaGuardia Airport. There is just so much going on in New York City in so many ways right now that is bringing and encouraging travelers to come to the area.
Mark Stekelenburg brings to CBRE and the hospitality industry an expertise in strategic advisory assignments, acquisition and disposition due diligence, market and economic feasibility studies, complex asset and business valuation assignments, litigation support, and development and operational planning. He previously spent 10 years in PKF Consulting’s Los Angeles office, which was acquired by CBRE in July of 2014. He has worked with all types of hospitality assets, including hotels, resorts, casinos, golf courses, ski resorts, condominium hotels, vacation/shared ownership projects, and mixed-use hospitality projects in markets throughout the United States, as well as Mexico, Costa Rica, the Caribbean, Africa, Europe, and Asia.