NYC Hotels Predicted to Hit Normal Occupancy Rates by 2025: CBRE Report
New York’s hotel industry is inching its way to recovery after being decimated by the coronavirus pandemic, with normal occupancy rates predicted to return by 2025, thanks to vaccinations and COVID-19 relief money, a CBRE report found.
CBRE’s report predicted an average occupancy level for hotels of 43 percent for the first half of 2021, an increase from the average 35 percent occupancy recorded in 2020.
The speed of vaccinations, which outpaced CBRE’s previous predictions, along with the reduction of lodging supply — due to closures and fewer new projects — and the $1.9 trillion coronavirus relief bill approved in March are expected to boost the hotel and lodging industry at large.
“Since we developed our February 2021 forecast, the pace of vaccination distribution has topped two million a day, more than we originally foresaw,” Bram Gallagher, a senior hotel economist at CBRE, said in a statement. “In addition, the recent $1.9 trillion COVID package should boost lodging demand, while providing hotel owners with much needed financial assistance. The combination of these factors solidifies our improved outlook for the second half of 2021 and beyond.”
The city’s hospitality industry was battered during the pandemic as travel dried up. As a result, numerous hotels — especially in Midtown — shuttered, leading to sweeping job losses, and plans to convert some empty hotels into offices or housing.
However, things have started to slowly improve. Hotel occupancy in the city hit the highest levels seen since last June, in the week ending on March 13, at 47 percent. Times Square visitor traffic also grew, but March numbers remained a shadow of the world before the pandemic hit.
The commercial real estate brokerage firm anticipates that higher-priced hotels will see faster growth in 2021, thanks to greater business and leisure travel. For 2022, CBRE predicted an average 74.3 percent occupancy rate. Looking even farther forward, CBRE expects a return to more normal occupancy levels, 86.4 percent, by 2025. Revenue per room will return to 2019 levels in 2024, according to CBRE.
The Big Apple is set to fully reopen July 1, and Mayor Bill de Blasio dedicated $25 million for a tourism campaign designed to bring visitors back to the city in his budget proposal, which he announced on Monday. CBRE predicts that New York’s transformation into a reopened, mostly vaccinated city would draw tourists and heal the lodging industry.
“New York City is now starting to experience an economic rebound as shopping, entertainment and other businesses are opening their doors once again after a year of multiple closures and stay-at-home orders,” CBRE’s Mark VanStekelenburg said in a statement. “With the accelerated pace of vaccinations, we will continue to see tourism rebound and the hotel industry come back to life in the second half of 2021 and beyond.”