Though the impact of the coronavirus outbreak was felt on a national level, New York City was hit very hard. For well over a year, office buildings have sat vacant and retail stores in popular shopping districts have been boarded up.
Hotels have also grappled with devastating vacancy rates as the pandemic kept tourists away from the city. In 2019, more than 66 million visitors flocked to New York City, generating $70 billion in economic activity. And while tourism is finally picking up once again, it hasn't yet reached pre-pandemic levels.
That's put New York City's hotels in a tough spot. Many hotels furloughed employees when it became clear that tourism was going to be sluggish for quite some time. Now, more visitors are coming to the city, but the numbers aren't high enough to support bringing back hotel staff in full.
Hotels still need a revival
In late June, New York City hotel occupancy sat at around 66%. But that's down from almost 90% before the pandemic began. As such, a lot of furloughed hotel workers are still out of work. And if hotels don't bring them back soon, they'll risk losing them for good.
As of May, only 16,000 of New York City's hotel and motel workers had returned to their jobs, as per the state's Department of Labor. That represents only 30% of the city's 52,000 hotel and motel employees.
Of course, part of the reason hotel workers aren't back in full force is that not all New York City hotels have reopened. For one thing, some properties closed for good during the pandemic. Others, meanwhile, are waiting to welcome back visitors. For hotels that commonly attract a theater crowd, for example, delaying their reopening until September, which is when Broadway is slated to welcome back patrons, makes sense.
Still, hotel operators face a dilemma. Right now, tourism is up, and it takes the right amount of staff to provide a quality experience for guests. But if business is still limited and revenue is down, it's hard to justify bringing back staff at full force.
As of late June, average hotel room rates in New York City had risen to $194 per night after plunging last year. But the average revenue per room was only $128, compared to $257 for all of 2019.
New York City is investing in a $30 million marketing campaign designed to draw in tourists. If more people come to the city, it'll help not only hotels but also restaurants, retailers, and countless local business owners recover from the events of the past year.
It could still be a while until tourism returns to pre-pandemic levels, and that's something the city's real estate investors will need to be aware of. It also means that for the time being, hotels are stuck in limbo when it comes to bringing back staff, and while that puts them in a bad spot, it's even harder on those individuals who aren't quite sure if they should seek out new jobs or not.