The law of supply and demand states that as a sought-after good becomes more available, its price will eventually decline. Hotel beds seem to be bucking this law. This summer, more people paid more money to overnight in the city, even as hotels has added thousands of new hotel beds.
“Some developers have joked to me, if you build it, they will come,” said John Fox, a vice president at PKF Consulting, a firm that collects tourism statistics. “Essentially we have in New York – unlike a lot of other markets – had a very large increase in the supply of rooms, and we have occupied them.”
In July, occupancy was more than 90.1 percent, an improvement on last year’s rate of 89 percent. Nationally, the occupancy rate in 2011 was 60 percent, PKF reports.
Fox says the high occupancy rate combined with expanding supply of rooms means more people slept in New York hotel beds in July 2012 that at any time since PKF began tracking the industry in 1968. PKF’s numbers include Manhattan only.
So far this year, visitors have been willing to pay higher prices than in 2011 to stay the night in New York. PKF reports the average room rate was $248 this July, up from $244 in 2011.
But while room rates are higher year-to-year, they are still below those paid in 2008, according to figures from Smith Travel Research. That’s likely due to increases in capacity, especially the growth in hotels targeting budget-conscious travelers.
Donna Grey, a Chicago-area real estate agent, recently visited her son in Manhattan. She spent a week and a half searching sites like Priceline and Cheaptickets, before settling on a room in a Ramada on Lexington Avenue, for $169 a night.
“I did come up with a very good price,” Grey said.
Since the year 2000, New York has added 26,000 rooms. Many of them, like that Ramada, are somewhat smaller hotels outside of the main tourist areas.
Chris Heywood, a spokesman for NYC Company, noted that many of the hotel openings this year have been in Brooklyn and Queens, such as the Wythe in Williamsburg and the Z Hotel in Long Island City.
More than 3,000 rooms have been added so far this year, and that seems to have had an effect on employment. While New York City private sector job growth stands at 2 percent this year, hotel employment has risen 5.7 percent, according to an analysis by Eastern Consolidated.
