"Last straw" for NYC hotel industry?

David Goldsmith

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In NYC the hotel industry has been struggling with issues of overbuilding and lack of profitability for a while now even with a booming economy and record tourism to NYC:
"How much are NYC hotels hurting?
The five boroughs have a swollen pipeline of hotel projects, and revenue is moving in the wrong direction as the market inches closer to a recession

" During a recent earnings call, Starwood Property Trust CEO Barry Sternlicht broached a touchy topic in the real estate world: the possibility of a recession.
The head of the $56 billion real estate investment trust told investors and analysts that “the only thing we have to worry about is a calamitous recession,” warning of a slowing economy largely thanks to the national political environment.
Specifically, Sternlicht said Starwood needs to be “über-careful” in the hotel sector because of a potential oversupply.
Developers have, in fact, been churning out hotels at a blistering pace. And New York is one of several U.S. cities (along with Miami) that have seen a boom in hotel construction.
As of May, there were more than 18,700 hotel rooms across 112 new developments under construction or being planned in the five boroughs, according to NYC & Company, the city’s tourism arm. That includes a 128-key Hotel Indigo in the Financial District and a 137-key Six Senses resort and spa at HFZ Capital Group’s “the XI” development in Chelsea.
Meanwhile, Marriott and hotelier Ian Schrager opened their roughly 450-room Edition hotel in Times Square this year, and just last month the same chain opened a 285-room Moxy in the East Village.

Those properties are just a few of the newbies. If all of the planned rooms are built, there will be nearly 139,000 rooms citywide by the end of 2021 — a 15.5 increase over the middle of this year, NYC & Company’s data shows."

"More NYC hotel loans are defaulting as room rates fall
A report also found at least 21 CMBS mortgages backed by New York hotels are watchlisted for potential difficulties

New York City has seen a spate of high-profile hotel loans go into default in recent months, and challenging market fundamentals certainly aren’t helping.
The average daily room rate for New York hotels dropped to $255.16 last year — the lowest point since at least 2013 — the Wall Street Journal reported, citing data from STR. And with more than 22,000 hotel rooms in the pipeline, that figure is set to weaken further."

Yet still continues a massive increase in new hotel construction:

But now with the current crisis the entire travel industry is be hit particularly hard and NYC revenues have taken a nosedive.

“We are not close to the bottom in the US”: Hotels suffer declining revenues, mass layoffs
Nationwide, the coronavirus has cut deeply into occupancy and root rates

In New York City, occupancy was nearly halved from the week earlier to a rate of about 49 percent, according to STR. Some hotel owners have said occupancy in their properties is as low as 15 percent.

Revenue per available room in New York fell by nearly 55 percent to just about $88 per room.

Several hotels in New York are closing down as reservations have disappeared. The 1,878-room Hilton hotel in Midtown, one of the largest in the city, is closing later this week.

The New York Hotel Trades Council said roughly half of its 40,000 members have been laid off.

“This is a very dark moment not just for the hotel industry,” union president Peter Ward told the New York Times. “It’s a dark moment for the retail industry, for the restaurant and bar business, for Broadway.”

Depending on how much money money the Federal Government throws at the industry in a relief package (but also taking into consideration how the current Administration seems to be always sticking it to New York City) how can a lot of these properties continue to keep servicing the massive debt loads they have taken on?

David Goldsmith

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Williamsburg Hotel dispute escalates as pandemic raises stakes
Benefit Street says Toby Moskovits still controls hotel revenues

A month after a temporary receiver was appointed for Toby Moskovits’ Williamsburg Hotel, fighting over the property has veered off into a new direction — and its fate seems cloudier than ever.

In court documents filed Tuesday, lender Benefit Street Partners claims that receiver Constantino Sagonas has violated his marching orders by allowing Moskovits to maintain control of the hotel’s revenue and by ignoring demands for information about the hotel’s finances.

At the same time, the coronavirus pandemic has devastated the hospitality industry.
“The crisis created by the Covid-19 has forced all of us to reassess our priorities and adjust our approach to business,” states the lender’s motion, which seeks to compel Sagonas to abide by the agreement. “But it does not diminish [the] lender’s rights.”
In fact, Benefit Street argues, the situation makes it imperative that the courts force the receiver to act because “the hotel industry, and [the] lender’s collateral in the hotel, is in particular jeopardy.”

David Goldsmith

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Some NYC hotels were struggling to make debt payments. Then came coronavirus
New data show which properties were barely getting by before pandemic brought travel to a screeching halt

Towering 47 stories over Times Square, the Hilton hotel on West 42nd Street was already operating on the knife’s edge before the coronavirus pandemic ground New York City to a virtual standstill.
The 476-key hotel had started to see expenses for its rooms and food-and-beverage component spike early last year. Cash flow got so tight that nearly every dollar of income as paying the debt service on the property’s $92 million mortgage.
And that was when times were good, with the Hilton reporting occupancy of 99 percent.
Now, two weeks after New York state recorded its first coronavirus case — and with New York City on the verge of a possible “shelter in place” order — some hoteliers are saying occupancy has nosedived to 15 percent.
And hotels, especially those that were on shaky ground to begin with, are facing a crisis.
“Hotels that have low debt service ratios were already vulnerable,” said Anne Lloyd-Jones, a senior managing director at the hospitality consulting firm HVS. “They have a very thin layer of protection.”

When the Hilton’s debt service coverage ratio (DSCR) — a metric commonly used in the hotel industry to measure a property’s ability to pay its mortgage and interest expenses — dipped dangerously low last year, the servicer ordered the owner to conduct what’s known as a cash sweep. The idea would be to place any excess cash flow into a special account to pay down the loan’s balance.

The Hilton’s loan had been underwritten assuming net operating income would be 2.16 times its debt service, but by late last year the DSCR dropped to 1.18 times.

The Hilton, however, was not alone.

New figures from real estate data firm Trepp shows there were more than half a dozen hotels in New York City that had a debt service ratio below 1 before the coronavirus pandemic hit, meaning cash flows weren’t sufficient to service the debt, and owners had to reach into their pockets to make payments. And still more were dangerously close to that threshold, according Trepp, which provided the data to The Real Deal.

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Yeah this sector is troubling. But we got a fiscal relief program coming any day now, so how does that factor in to bridge the short term pain?

David Goldsmith

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The 2008 Financial Crisis happened when "Big Capital" took on risky loans and those risks occured. If hotels implode and take these huge REITS with them, what happens next?

"Shadow bankers could be left picking up the tab if hotels fail
Apollo, Starwood among mortgage REITs that bet big lending on hospitality industry; coronavirus pandemic exposes that risk

Billionaire investor Leon Black went big on hotels in the years following the Great Recession, as alternative lenders like his Apollo Global Management stepped into the void left when banks curtailed some of their riskiest lending due to new regulations.

But now, as the Covid-19 pandemic slams into the hospitality industry, Apollo, Starwood Property Trust, Blackstone Mortgage Trust and others in the shadow banking system stand to lose more as their search for risky, higher-yielding deals leaves them exposed to hotels.

“There’s more risk in hotels than, say, a commercial building where you have a rent roll and you know the rent is coming in,” said Eric Orenstein, an attorney at Rosenberg & Estis who works on hotel financings. “[A hotel] can’t guarantee occupancy.”

In the years following the Great Recession, alternative lenders like private debt funds, mortgage real estate investment trusts and other nonbank lenders started playing a bigger role in the financial system. Unburdened by some of the stricter regulations that tied the hands of banks, they sought out high-risk, high-reward investments to juice their returns.

And they found just what they were looking for in hotels. Yields on hospitality properties can be 50 to 100 basis points higher than office properties. That’s because of the inherent volatility of the sector: Rents get reset every night, and shocks to the system — such as the current global pandemic is proving — hit hotels fast and hard.
Traditional bank lenders, experts said, usually steer clear of exposing too much of their balance sheet to hotels, ranging somewhere in the area of 6 to 10 percent. But many nonbanks go much higher.
Apollo Global Management’s mortgage REIT — Apollo Commercial Real Estate Finance — had 26 percent of its $6.3 billion portfolio allocated to hotels in 2019, the company’s latest annual report with the Securities and Exchange Commission shows. That’s the largest slice of the pie, and up from 12 percent in 2010.

A spokesperson for Apollo did not respond to a request for comment.
Other mortgage REITs have high exposures as well, among them Colony Credit Real Estate (14 percent), Blackstone Mortgage Trust (13 percent) and TPG Real Estate Finance Corp. (13.4 percent).
Starwood Property Trust had nearly 21 percent of its real estate debt portfolio allocated to hotels, second only to office properties. (Starwood has investments other than commercial real estate debt. In terms of its overall portfolio, hotel debt makes up about 11 percent.)
Starwood Capital Group CEO Barry Sternlicht earlier this week acknowledged the severity of the Covid-19 pandemic, but said he believes it will abate sooner than some projections that say it will persist through the summer.
“We’re facing World War III for 90 days. It’s not World War III for five years, or World War III for 10 years,” he said Tuesday.

David Goldsmith

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The Plaza shuts down and lays off 251
Historic hotel makes “difficult decision” to suspend service

David Goldsmith

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Fed to mall and hotel owners: Drop dead
Non-investment-grade REITs left in the cold by Fed’s $10B bond-buying program

David Goldsmith

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Staff member

The picture for the country’s hotels continued to grow ever worse last week, as more than three quarters of the nation’s hotel rooms sat vacant.

Nationwide, occupancy fell almost 68 percent to an occupancy rate of 22.6 percent during the week of March 22 to March 28, according to the hospitality data firm STR. The rate of decline accelerated from a drop in occupancy of roughly 56 percent the week before.

STR senior vice president Jan Freitag said that declines like these are the “new normal” until the number of new Covid-19 cases show a significant slowdown.

“2020 will be the worst year on record for occupancy,” he said, noting that more than 75 percent of rooms around the country sat empty last week. “We do, however, expect the industry to begin to recover once the economy reignites and travel resumes.”

Across the country, average daily room rates fell shy of 40 percent to about $80, and revenue per available room plunged 80 percent to just a few cents more than $18.

New York City saw occupancy nosedive more than 80 percent to just above 15 percent. Miami recorded the largest drop in daily room rates, tanking nearly 60 percent to short of $117. Occupancy at Miami hotels fell 77 percent, to 20 percent.

Chicago and Los Angeles both registered a drop in occupancy of nearly 75 percent to about 16 percent and 21 percent, respectively.

Hotels across the country — including marquee names like the Plaza and Four Seasons downtown — have shuttered and laid off and furloughed staffers.

Meanwhile, New York City is looking to rent hotel rooms that can be converted into hospital rooms for non-Covid 19 patients. The city is trying to free up room in medical facilities for those afflicted with coronavirus. Other hotels have been opening their doors to first responders in the city.


but Las Vegas is doing worse

David Goldsmith

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A stunning 7,300 Covid-related layoffs in two days reported to state
Filings flood New York Department of Labor

The Mandarin Oriental. Soho House. Colony Club.
Coronavirus-related layoffs continue to pile up.
On Friday and Thursday alone, some 88 layoff notices were filed in New York, signaling that employers across the state would jettison more than 7,300 workers because of Covid-19.
The 405 so-called WARN notices filed since March 20 dwarf the total of 76 for the entire year to that point, an analysis by The Real Deal found. In those two weeks’ of notices New York companies indicated they would slash almost 28,000 jobs because of Covid-19. WARN notices are not required for employers of fewer than 50 people.
In New York City this week, hotels and retailers once again appeared to bear the brunt of the damage. Soho Club New York said it was letting go of 32 people because of coronavirus-related uncertainties. The Ludlow Hotel at 180 Ludlow Street was parting with 70. And the high-end Mandarin Oriental at 80 Columbus Circle, which closed last week, was saying goodbye to another 50 workers.
“As of March 26, in keeping with federal, state and local emergency declarations and health guidelines to contain the spread of COVID-19, Mandarin Oriental, New York has taken the difficult decision to temporarily close, with an expected reopening on June 1,” the hotel wrote on its website.
Also on the list was Colony Club, the womens-only social club on Park Avenue. It is letting 60 people go.
WARN notices, filed with the state’s Department of Labor and typically dated before their public filing, by no means represent all layoffs in the state. During the last week of March, more than 369,000 New Yorkers filed for jobless claims, up by 288,516 claims from the prior week.
The layoffs also have stretched to real estate firms. Warburg Realty, for instance, furloughed a fifth of its 25-person staff. Douglas Elliman laid off 100 agents. And women-focused co-working company The Wing slashed hundreds of jobs, Bloomberg reported.
Nationwide, claims for unemployment benefits skyrocketed to a record 6.6 million last week, doubling the prior week’s record of 3.3 million. And the country’s unemployment rate rose to 4.4 percent in March from 3.5 percent the month before.
“The jump in the unemployment rate by almost a full percentage point exceeded expectations, but only points to the level of distress among many households,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association, in a statement.
And as the coronavirus continues to spread throughout the country, the grim employment numbers figure to get worse in the weeks to come. Experts foresee fewer Americans plunking down money for homes and more siphoning it out of them.
“This weakness will result in a drop in demand for purchase mortgages, but we do expect continued strong demand for refinance loans over the next several months, given the record low level of mortgage rates,” Fratantoni added.

David Goldsmith

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Hotel occupancy rate across US drops to 22%
For the top 25 markets, the numbers are even lower, according to latest STR report

The coronavirus pandemic continued to batter the U.S. hotel market in the first week of April.

The national hotel occupancy rate plunged to 21.6 percent for the week ending April 4, a nearly 69 percent drop from the same time last year, according to data from hotel research firm STR. The rate for the last week of March was 22.6 percent.

For the top 25 markets in the U.S., the drop was more staggering: Occupancy fell to 19.4 percent, down about 75 percent from 2019. Of those top markets, Hawaii’s Oahu Island recorded the largest year-over-year occupancy drop of about 91 percent to the only single-digit occupancy level of just 7 percent.

In New York City, the hotel occupancy rate came in at 18.3 percent, which is about 79 percent lower than the same time last year, according to STR. That occupancy figure is slightly higher than the nearly 15 percent reported for the last week of March.

The Miami/Hialeah market recorded its worst week yet during the pandemic, with a 18.5 percent occupancy rate. That is down about 77 percent year over year. Chicago and Los Angeles notched slight increases during the first week of April from the week before, but the occupancy rates were still down significantly year over year.

Data worsened from last week, but there are patterns emerging. Economy hotels had the highest occupancy rates, and interstate and suburban properties also had top rates among location types, said Jan Freitag, STR’s senior vice president of lodging insights.
“This shows there are still pockets of demand while more than 75 percent of the rooms around the country are empty,” Freitag added.
With the global economy reeling and cities like New York, Los Angeles, Chicago and Miami under stay-at-home orders, hotels have been emptying out or shuttering altogether. Many of them had already been struggling with debt payments before the virus hit, and recently have been forced to furlough and lay off thousands of staffers. Some of the hotels that are open have been adding to their occupancy by working with municipalities to house Covid-19 patients or people who have been exposed to the virus.

David Goldsmith

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Hotels head for rock bottom
Operators barely fill rooms, and when they can, they get almost nothing

Hotel occupancy rates have plummeted over the past two months, leading major hospitality companies to lay off or furlough huge numbers of employees and seek a bailout from the federal government.

In the last week of March, national hotel occupancy rates dropped by 21.6 percent from the same period last year, according to data from STR. The average daily rate (ADR), or the average revenue an occupied room brings in per day, decreased to $76.50 from $130.77 last year, a 41.5 percent decline. The revenue per available room (RevPAR), a measure used to evaluate a hotel’s ability to fill its open rooms, declined 81.6 percent from last year to $16.50.

STR Hotel Data: March 4 – April 8, 2020

Show 102550100 entries
MarketDateOccupancyOccupancy % changeADRADR % changeRevPARRevPAR % change
Chicago, CBDMarch 29 - April 47.0%-91.1%$108.91-41.20%$7.63-94.8%
Chicago, ILMarch 29 - April 417.1%-75.6%$73.50-75.60%$12.61-87.0%
Los Angeles/Long Beach, CAMarch 29 - April 421.5%-73.3%$114.57-34.60%$24.62-82.5%
New York, NYMarch 29- April 418.3%-79.1%$135.70-45.30%$24.79-88.6%
FloridaMarch 29 - April 418.3%-77.4%$91.83-44.8$16.81-87.5%
Chicago, CBDMarch 22-285.9%-90.9%$107.51-27.60%$6.31-93.4%
Chicago, ILMarch 22-2816.1%-74.8%$73.62-37.60%$11.88-84.3%
Los Angeles/Long Beach, CAMarch 22-2821.0%-74.1%$118.18-32.00%$24.85-82.4%
New York, NYMarch 22-2815.2%-81.8%$146.37-33.10%$22.32-87.8%
FloridaMarch 22-2820.4%-75.6%$97.21-47.4$19.87-87.2%
Showing 1 to 10 of 25 entries

Source: STR

Hotels in some markets have fared worse than others, with urban hotels experiencing sharper drops in occupancy. STR’s data shows that the top 25 markets showed sharper declines in occupancy rate (down 74.7 percent, to 19.4 percent), ADR (down 47.0 percent, to $85.61) and RevPAR (down 86.6 percent, to $16.57).

In markets covered by The Real Deal, including New York City, Los Angeles, Miami and Chicago, occupancy rates declined by at least 70 percent year over year. New York’s occupancy rate dropped the most: 79.1 percent. Still, that was an improvement over the previous week’s year-over-year drop of 81.8 percent, a sign that the occupancy rate has bottomed out.

David Goldsmith

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US hotel occupancy inches down to 21%
Rate last week was 70 percent lower than a year ago, but ticked up in NY

The hotel industry’s nightmare continued last week as occupancy nationwide dipped to a meager 21 percent.

The country’s occupancy rate for the week ending April 11 was one point worse than a week ago and 70 percent lower than a year ago, according to the hospitality data firm STR. Revenues per available room, or RevPAR, declined nearly 84 percent from the same time last year to $15.61.

If there were any bright side to the news, it was that the nadir may have been reached.

“There was not much of a change from last week. As we’ve noted, RevPAR declines of this severity are our temporary new normal,” STR senior vice president Jan Freitag said. “Several weeks of data also point to occupancy in the 20% range to be the low point, and economy hotels holding at a higher occupancy level is the pattern right now.”

In New York, last week’s occupancy rate of 24.8 percent was actually higher than the previous week’s of 18.3 percent, which STR said was likely attributable to an influx of first responders and medical workers. Still, it was nearly 72 percent worse than it was in the same week a year ago.

Revenue per available room in New York was $31.67 last week, a decline of nearly 77 percent from $136 at the beginning of March.

Hotel owners are already seeking assistance on their mortgages as travel and tourism in the country have ground to a virtual halt.

In Los Angeles, occupancy dropped more than 74 percent to a rate of a little more than 21 percent, and RevPAR declined about 85 percent to $22.78.

Chicago saw occupancy decline about 78 percent to a rate of nearly 18 percent, and RevPAR fell 90 percent to $12.78.

Miami had an occupancy rate of roughly 20 percent – a drop of nearly 76 percent from the same time a year earlier. RevPAR declined about 90 percent to $18.02.

David Goldsmith

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Hotel CMBS loans worth $2B fall into special servicing
Single-borrower loans suffer from lack of diversification as virus slams lodging

As the coronavirus roils the commercial-mortgage backed securities market, loans on hotel properties have been ahead of the curve when it comes to delinquencies and special servicing.

Three massive CMBS hotel portfolio loans, covering 186 hotels with a total outstanding balance of about $2 billion, were among the largest to be transferred into special servicing so far this month, Commercial Observer reported citing Trepp. Single-borrower transactions backed by only hotels have been the hardest hit of all.

“Of the top 24 loans that were sent to special servicing with the April remittance cycle to date, all but three have been hotel loans,” Trepp analysts wrote in a Thursday update.

The three big portfolio loans are all of recent vintage, having been originated in 2018 and 2019.

  • The most recent was a $752 million loan on the 92-hotel HIT portfolio, which included Homewood Suites Chicago Downtown and the Residence Inn Los Angeles-El Segundo among other properties. A Morgan Stanley-led group originated the loan last May, and more than a dozen of the hotels in the portfolio have already been paid off. But the debt backed by the remaining hotels in the deal was moved to special servicing due to “imminent monetary default.”

The servicer on another deal, the Tharaldson Hotel portfolio loan, provided more detailed commentary. The borrower, Tom Barrack’s Colony Capital, had requested a 90-day deferral for debt payment as well as suspension of various deposits and other accommodations, which the master servicer could not provide. The $777 million loan covered 135 hotels at issuance in 2018, about a third of which have since been released since.

Colony, formerly a junior mezzanine lender on the Tharaldson portfolio, had gained control of the hotels — mostly in California, Nevada and Texas — in 2017 when the previous borrower failed to secure refinancing.


Finally, a $720 million loan on the Ashford Highland portfolio was also put into special servicing, but no detailed commentary was provided.

Last month, Kroll Bond Rating Agency assigned a “Underperform” outlook to all single-asset single-borrower lodging deals that it was tracking — including the Tharaldson portfolio — citing a likely decline in occupancy to around 10 percent as had been the case in China and Italy.

Occupancy at U.S. hotels fell to 21 percent during the week ending April 11, according to the hospitality data firm STR. That’s a 70 percent drop from a year ago.

“If occupancy levels among KBRA-rated CMBS SASB lodging properties fall to this level for an extended period, none would be able to achieve breakeven debt service coverage,” Kroll analysts wrote.

David Goldsmith

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Hotel revenue improves from abysmal to merely awful
NYC’s revenue per available room rose to $40.70 last week, aided by closures

As the national occupancy rate for hotels rose last week, thanks in part to medical workers filling guest-starved rooms and lots of empty hotels shutting down, another key metric tracked by the hospitality industry climbed: revenue per available room, or RevPar.

RevPar is a metric that allows hotel owners to see how much revenue they are generating from a property’s bookings. For the week ending April 18, the average RevPar in the U.S. rose by 5.2 percent to $17.43 from $15.61 the week prior, according to data from hospitality research firm STR. But the figure is still down 79 percent from its level a year ago because the coronavirus pandemic has decimated the travel industry.


Across major markets, a similar pattern plays out. New York City recorded its lowest RevPar figure during the week of March 22, but since then the figure has steadily risen and ended last week at $40.70, according to STR. Still, that is 70 percent lower than what the city saw in the beginning of March, before the coronavirus led to mass shutdowns across the country.

The closure of virtually vacant hotels pushes RevPar up because shuttered rooms are not counted in the metric.

Chicago also experienced its lowest RevPar figure that week, of $11.88, down from $64.27 at the start of March. In that city, RevPar has inched up since then.

Miami and Los Angeles saw their low points a couple of weeks later, when RevPar tumbled to $14.64 and $22.78, respectively, the second week of April — almost 89 percent and 83 percent lower than in the first week of March. But again, RevPar in both markets closed higher in the third week of April.

RevPar in Major U.S. Cities, March through April 18

Show 102550100 entries
DateNew YorkMiamiLos AngelesChicago
March 1-7$136.05$134.85$130.4164.27
March 8-14$88.25$114.95$92.71$47.90
March 15-21$26.96$48.74$36.56$16.80
March 22-2822.32$19.87$24.85$11.88
March 28-April 4$24.79$16.81$24.62$12.61
April 5-11$1.67$14.64$22.78$12.78
April 12-18$40.70$15.55$26.07$14.28
Showing 1 to 7 of 7 entries

The occupancy rates for these markets also bumped up for the week ending April 18, according to STR, in tandem with the national average. New York last week had the highest of the four markets cited above, at 33 percent, likely because of healthcare workers occupying rooms. Meanwhile, Chicago and Miami’s occupancy rates were still below 20 percent.
Hotel Occupancy Rates in Major U.S. Cities from March through April 18

Show 102550100 entries
DateNew YorkMiamiLos AngelesChicago
March 1-772.1%77.1%74.8%56.1%
March 8-1448.8%67.3%58.3%43.8%
March 15-2116.8%35.0%29.0%20.4%
March 22-2815.2%20.4%21.0%16.1%
March 28-April 418.3%18.3%21.5%17.1%
April 5-1124.8%17.7%21.2%17.7%
April 12-1833.3%18.9%24.4%19.6%
Showing 1 to 7 of 7 entries

David Goldsmith

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I have little simpathty for most of those people because I feel AirBnb is largely a regulatory and tax avoidance scheme which has damaged affordability in many places as well as contributed to declining quality of life. I was reading an article the other night about how most of the prostitution in Iceland was taking place in AirBnb rentals. And since several years ago hotel chains started training their employees to recognize signs of "human trafficking for the purposes of prostitution," I suspect the same shift has occurred here as well.

But also, I think that the NYC hotel overbuilding was severe enough that it was ready to crash anyway and this will hasten it. I also suspect that NYers are going to rat out AirBnb rentals a lot more now.
Last edited:

John Walkup

Talking Manhattan on UrbanDigs.com
Don't disagree with your conclusions, but also think that at some point, a cash strapped NYS will recognize gold in those airbnb hills, and contrary to the powerful hotel lobby (who knew?) will regulate and tax like there is no tomorrow. That if anything, would be the death of airbnb. Imagine if amazon had to pay state sales taxes in 1999....

David Goldsmith

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Vornado might never reopen century-old Hotel Pennsylvania, CEO says
Pandemic seen as chance to pursue long-sought development

For more than 20 years Steven Roth has wanted to close the Hotel Pennsylvania, demolish it, and build a tower in its place.

Now that the coronavirus pandemic has forced the Vornado Realty Trust CEO to take that first step, he is thinking anew about the other two.

As tourism dried up, Vornado closed the not-quite-prestigious hotel at 401 Seventh Avenue on April 1 and furloughed 414 of its employees. Then, on an earnings call Tuesday, Roth called the hotel “a parking lot for a development site” and revealed, “We have thought internally about using this and just never reopening it.”

By “this,” Roth apparently meant the opportunity of the closure to get started again on a project Vornado has wanted to do for a long time.

Roth quickly said it is likely that the hotel will reopen. It’s worth noting that the 414 employees were furloughed, not laid off, meaning they are still likely receiving benefits and are expected to be brought back.

But since Vornado bought what was once the world’s largest hotel in 1997, it has repeatedly tried to replace it, only to see plans fall through for one reason or another. It originally intended to rebrand the hotel along with acquisition partner Ong Beng Seng, a Singapore-based hotel developer, but that effort ended within two years. A 2007 plan to erect a 68-story tower anchored by Merrill Lynch died when the financial crisis hit a year later.

The City Council in 2010 approved zoning for a tower. But a year later, office rents in the area were still too low for Vornado to justify building its proposed 15 Penn Plaza, so it pivoted to a $300 million renovation of the hotel. In 2016, facing competition from office towers at the World Trade Center site and Hudson Yards, Vornado considered a condominium and retail project. Renderings for a 2.8 million-square-foot tower were leaked in 2018, but nothing came of that.

Yet more renderings for a tower were released last year, but Facebook declined to commit to space and Vornado appears unwilling to build without an anchor tenant in hand.

Before Vornado, the Hotel Pennsylvania — named for the famous railroad company that built it in 1919 — had been associated with many of the biggest names in hospitality or real estate: Ellsworth Statler, its first operator, whose namesake firm rebranded it the Hotel Statler in 1949; Conrad Hilton, who bought all 17 Statler hotels in 1954; William Zeckendorf Jr., who acquired it in 1979 for $24 million; and Elie Hirschfeld, his father Abraham Hirschfeld and Arthur Cohen, who together with the Penta Hotels chain paid $46 million for the hotel in 1983, overhauled it and renamed it the New York Penta.

The chain’s partners bought it out in 1991 and restored the original name.

Still somewhat unglamorous — it was denied landmark status by the city in 2010 and its 1,700 rooms last year were priced in the $175 to $200 range — the Hotel Pennsylvania celebrated its 100th birthday last year by undertaking a “multi-phase room modernization.”

Its general manager told hotelbusiness.com in June that “more people have stayed here than any other hotel in the world.” But its Twitter account has been silent since October, and now Vornado is thinking again about making the historic hotel, well, history.