HENDERSONVILLE, Tennessee—When you think of STR’s top U.S. hotel markets, New York is one that always comes to mind. It’s generally thought of as having strong occupancies and high rates, in good times and in bad. Because this current economic crisis is affecting everyone across the board, we’re going to see how the New York market has been affected and to what extent.
It’s no surprise New York consistently has brought in rates well above US$200 for the past couple of years, but it’s unexpected how much of a rate premium it has within the top 25 markets. In the chart below, we’ve analyzed data on a 12-month moving average starting in 2002. Throughout the past six years, the smallest premium New York had on the top 25 markets was US$69.66 in September 2003, and it has only gone up from there. The highest premium of US$149.16 was reached in September 2008, while the top 25 markets had a US$40.49 premium over the rest of the U.S. The ADRs for New York, top 25 markets and the rest of the U.S. were US$283.01, US$133.85 and US$93.36, respectively.
Even though New York is one of the strongest markets, it isn’t immune to the economic recession. The premium, which started to drop slowly at the end of 2008, now has dropped US$16, down to US$132.87 as of a 12-month moving average ending in April 2009. One interesting thing to note is the rest of the U.S. has remained fairly stable, the average daily rate only fluctuating about US$3.00 during the past 18 months.
Despite the erosion in the industry, New York continues to generate a large percentage of revenue. Even without having the highest supply, New York made up 11.5 percent of the top 25 markets’ revenue as of April 2009 year to date. As a whole, the top 25 markets made up 42.3 percent of the entire U.S revenue, and New York represents 4.8 percent. It’s impressive one market can be such a key player even in these uncertain times.
In the months ahead, we’ll continue to track the performance of New York and the remaining top 25 markets. As we’ve seen in the past, New York is sure to rebound and remain a dominant player in the industry.