Though the coronavirus outbreak has battered a number of cities since tearing across U.S. soil, New York City has had it notably hard. Not only did the city emerge as the pandemic's initial epicenter, but the remote work movement drove a lot of people out of the city in search of larger, more affordable spaces.
In fact, over the past year and change, the streets of the city were emptier than they've been in a very long time, and it's not just because offices have been shuttered and residents have moved out. The city has also been missing tourists. That's done on a number on New York City hotels, which normally enjoyed healthy occupancy rates year-round.
In December of 2020, during the peak holiday travel season, the occupancy rate for NYC hotel rooms was just 36%. That's a decline of 88% from the December prior. And a big reason bookings were down boiled down to travel-related restrictions and fears.
Those restrictions, however, are largely off the table at this point. New York has reopened in full and is welcoming tourists back at full speed. And new data shows that they're finally starting to flock back to the city in droves.
A great week for NYC hotels
For the week of July 12, New York City hotels sold more than 481,000 room nights, representing an increase of 17,000 from the previous week, announced Mayor Bill de Blasio. The mayor is also confident that the city is well on its way to surpassing its weekly goal of 500,000 room nights.
New York City has sunk $30 million into a marketing campaign designed to attract tourists. At its peak, the tourism industry brought $72 billion into the city's economy and created around 400,000 jobs.
Still, the city's hotels have some ground to make up before they can declare a full recovery in the wake of the pandemic. In June, the occupancy rate at open NYC hotels was 63%, down from 90% during the summers of 2018 and 2019.
A slow return to business travel is hurting NYC hotels
A big reason why New York City hotels' recovery may be prolonged is that they've historically gotten a lot of bookings from business travelers on top of leisure tourists. But business travel may be one of the last sectors to get back to pre-pandemic levels.
At this point, many companies haven't even finalized their plans to bring workers back to office buildings. And many haven't reworked their budgets to allow for business travel again. Throw in the fact that a lot of companies may no longer be able to justify the expense of business travel in an age when digital communication is easy and widely available, and it's easy to see why occupancy rates at New York City hotels may not reach pre-pandemic thresholds for several years.
Still, real estate investors should take this news about hotels as a positive sign that the industry is slowly but surely enjoying a revenue surge after a miserable 2020. It's also a sign that New York City itself is on the road to the recovery it needs. That's good news for investors in all parts of the city, from office buildings to residential apartments and everything in between.