As Wall Street tumbles, so will New York City's hotel prices
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.
Luxury peddlers are quaking in their boots now that so many swaggering investment bankers (and their excessive bonuses) have suddenly been sent packing. Manhattan apartment prices are expected to fall. You and I were never going to party with $1,000 lobster and caviar frittata like the fat-walleted frat boys did, but at least now we can think more realistically about paying a visit to the Big Apple. Then again, they said that after 9/11, too, and New York's economy soared along with barely a bump.
Don't expect to see rates like the ones charged by your local highway motels, though. New York, along with Las Vegas and Orlando, make up America's biggest cities for tourism. As long as it's still one of the most desirable and cosmopolitan destinations in the world, rooms will always be at a premium. But it's nice to know that as prices rise throughout our lives, they're going down somewhere.