Is that a silver lining I see? Consumers may see a small benefit from Wall Street's latest woes. The meltdown in Manhattan's financial landscape (didja hear about that one yet?) means that there are going to be a lot fewer business travelers coming to town. Even though it's only been a little over a week since a few of Wall Street's best and brightest went down and dark, hoteliers are already taking a sober look at 2009 rates.
It's still too early to know how deep the room rate cuts will be, but we already know they'll be significant, and they're happening in a city where average folks could most use the price break. Last month, the average hotel room rate in Manhattan stood at a staggering $350, up $50 from just 16 months earlier. That price level is unheard of in most parts of America, but in New York's tight room market, the cost was buoyed by big-spending businessmen hitting town to schmooze with the likes of Lehman Brothers. Some estimates say Wall Street accounts for a fifth of Manhattan's economy.
The occupancy rate before the meltdown was a healthy 90%. Hoteliers know that's in the past. Not only are there fewer titans to feed that kind of traffic, but there's also the fact that surviving companies, particularly ones in the financial sector that feeds the city's hotel industry, are seeing the light and are seriously tightening their belts. Last month, hotels were projecting a six percent increase in rates next year, which was already about half as vigorous as usual. Now, they are already predicting that for 2009, room rates will largely hold at 2008 rates, if not drop a bit.