A souring economy is taking a bite out of the Big Apple’s robust hotel industry.
New York City’s hotels have been on a roll over the past year as a declining U.S. dollar lured throngs of foreign investors from Europe and Asia ready to spend big sums of cash on nice restaurants, shopping and other retail fare. Hoteliers were able to charge very high room rates amid a limited supply of rooms, even as lodging companies around the nation shuddered from strong economic headwinds.
Now, as the dollar gains strength amid a steep pullback in corporate and leisure travel, New York City hoteliers are finding they’re no longer immune from a deepening economic downturn.
“Through the first half of next year New York is going to be one of the weaker hotel markets in the country,” said C. Patrick Scholes, an analyst at FBR Capital Markets.
He said the supply and demand dynamics are starting to look unfavorable for New York City in 2009 and 2010 with new supply expected to increase at an annual year-over-year rate of about 6%. That compares to an average overall industry growth rate of about 3%. “The demand side of the equation is the larger concern, ” Scholes said.