It’s quite a good time to get a good deal on hotel rooms in New York City. Why? Bad weather, more rooms, the weak euro and Airbnb, according to a recent research note by Credit Suisse hotel industry analysts.
Revenue per available room—an important industry metric known as “revpar”—has slumped sharply at Big Apple hotels in recent months. Citing data from hotel information provider STR, Credit Suisse analysts noted that in January alone revenue-per-room declined 18.6% from the prior year.
Inclement weather, of course, played a role too. But other analysts noted how other structural changes such as a growing supply of hotel rooms and a weakening euro—thanks to the European Central Bank—are making New York less of a bargain for continental visitors. And they also noted that Airbnb is putting pressure on hotel prices, especially at smaller boutique locations.
Credit Suisse analysts write:
We are hearing hotel operators more often cite emerging sources of distribution/supply such as Airbnb as placing pressure on marginal locations, independents, and less well known boutiques … Bookings in three Manhattan districts including the Lower East Side/Chinatown, Chelsea/Hell’s Kitchen, and Greenwich Village/SoHo accounted for more than 40% of private stay revenue during a recent review period.
With as many as 10k units or more available at a time, we can see that on the margin this excess capacity can place pressure on a number of hotel locations that rely on leisure demand for those with an appetite for value/adventure.