New York Hotel Rates From April 2008 to 2009 Drop 25 Percent

New York City hotel rates plummeted by more than 25 percent in April compared with the same period in 2008, the most precipitous drop in average daily rate among major North American markets, according to data released late last month by Smith Travel Research.

Though New York was one of only two key North American markets examined by Smith Travel Research—the other being Manitoba/Saskatchewan, Canada—to see an occupancy decrease of less than 5 percent, the city witnessed one of the sharpest rate drops: down 25.5 percent to $203.58, according to the data.

Despite the precipitous drop in rate, New York remains the most expensive city in the country in which to spend a night in a hotel, said STR vice president of global development Jan Freitag. "New York City is always in its own universe," Freitag said. "It was, is and always will be the U.S. rate leader."

Though Freitag said the 25.5 percent decline in average April hotel rate is "significant," the cost to stay at a hotel in New York remains more than double the national average. Freitag noted, "The next highest average daily rate is Miami at around $155."

The city remains a popular leisure, meetings and business travel destination as evidenced by hotel occupancy levels that fell modestly and remain at around 80 percent, well above the national average.

Though Freitag said New York would sustain modest supply growth this year, thanks to hotel development initiated before the recession hit. "Once those rooms are open, built and ready for business, there are not a whole lot of rooms coming after that," he said.

That means the current rate declines in New York could be short-lived and recover along with the economy. Freitag said, "Once those hotels open in 2009 and 2010,we're not going to see a whole lot of new rooms coming on line. That's good news for the hotel industry because we're expecting to see demand bounce back by the beginning of 2010. Then we're going to have the reverse: an increase in the demand environment, but not much supply growth."

Originally published June 22, 2009