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?
Hotels Are Hurting in NYC
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
therealdeal.com
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."
New York City Hotel Mortgage Defaults Are On The Rise
New York City’s average daily room rate has hit its lowest point since at least 2013, and more hotel owners are defaulting on their mortgages.
therealdeal.com
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:
A massive hotel building boom is taking over New York City
Hotels in the construction pipeline include 56 in Manhattan, 21 in Brooklyn, 37 in Queens, eight in the Bronx and one in Staten Island.
nypost.com
But now with the current crisis the entire travel industry is be hit particularly hard and NYC revenues have taken a nosedive.
Hotel Occupancies Fall in Markets Affected by Coronvavirus
Hotel occupancies fell 25% to 50% in major markets hit hard by the coronavirus
therealdeal.com
“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?