There's a reason some hotels have been slower to recover from the blow of the pandemic than others. Hotels that typically welcome families and leisure travelers have already enjoyed an uptick in bookings this summer. On the other hand, hotels that primarily cater to business travelers still aren't seeing the numbers they want, and the fear is that it could take several years for business trips to resume at pre-pandemic levels.
Hotels adjacent to convention halls and conference centers are in a similarly unfortunate boat. Those that rely heavily on large events are likely to remain sluggish until organizers are more comfortable moving forward with large-scale gatherings. In fact, a number of New York City hotels happen to fall into that category, and so a recent announcement is bound to serve as a major blow.
The auto show is off
Organizers of the New York International Auto Show have announced that they're canceling the event due to concerns about the COVID-19 outbreak. The show was originally slated to open on August 20.
At first, organizers were eager to move forward with the event, especially given New York's promising vaccination rates. But then the delta variant struck, and now, things are looking worse with regard to the outbreak on a national scale.
The problem has gotten so bad that some cities are beginning to reinstitute mask mandates on the heels of the CDC's recommendation that even fully vaccinated adults mask up in indoor public settings. And New York City has just announced that it will be requiring proof of vaccination to take advantage of restaurants, theaters, and many of the city's indoor amenities.
That mandate, coupled with the cancellation of the auto show, is very bad news for real estate investors with New York City hotels in their portfolios. If larger events continue to be cancelled or postponed, it will take even longer for the city's hotels to recover from the misery that was 2020.
As of late June, New York City hotel occupancy levels had reached around 66%. That's down from almost 90% before the pandemic took hold. Not surprisingly, a number of New York City hotels have yet to bring their furloughed staff back to work. And if big events keep getting cancelled, hotels will be hard-pressed to restore jobs.
New York City was one of the hardest hit cities during the pandemic. Not only was it deemed the outbreak's initial epicenter, but the city has suffered a huge loss in revenue due to residents fleeing for the suburbs and tourists staying away. The fact that office building vacancy rates are very high in the city isn't helping matters either. Now, the city's hotels are being dealt yet another harsh blow at a time when tourism was just starting to pick back up.
Ultimately, the ability of New York City hotels to recover fully from the pandemic will hinge largely on the turn the outbreak takes. Now that more companies are beginning to mandate vaccines and masking requirements are coming back into the mix, hotel investors will have to hope that these measures do the trick in quashing the outbreak and making it possible for large events to resume.