The rate of growth in occupancy, ADR and RevPAR in Manhattan, while strong, continued to slow down in the second quarter. Luxury hotel occupancy benefitted from increased demand, while ADR growth levels improved significantly for lower priced hotels, according to a recent study by PwC.
Q1 RevPAR improved by 9.4% in the overall Manhattan market, while it increased 6.8% in the second quarter versus the same period last year. Annual increases in occupancy in the second quarter were highest in May, up 5.2%, and lowest in April, up 2.9%, according to the report.
The Manhattan hotel market averaged an occupancy level of 87.2% in the second quarter, indicating a return to stabilized pre-pandemic levels.
“While RevPAR growth decelerated significantly throughout the first half of 2024, minimal hotel room supply additions over the next several years are expected to benefit existing hotels, potentially resulting in price compression in the market,” said Abhishek Jain, principal, PwC.
Out of the four market classes, luxury hotels saw the highest YOY RevPAR lifts, up 8.35 for the quarter, boosted by 6.3% rise in occupancy from 76.2% in Q2 2023 to 81% percent in Q2 2024 and a 1.8% increase in ADR from $535.97 to $545.79.
Among upscale properties, quarterly occupancy grew by 2.4%, ADR improved by 3.2% YOY, resulting in a RevPAR rise of 5.7% from Q2 2023. Upper upscale properties posted a 7.2% increase in RevPAR from Q2 2023, driven by a 4.1% increase in occupancy and a 3% increase in ADR. Upper midscale properties witnessed a 6.6% increase in RevPAR from the previous year, attributable to an increase in occupancy of 2% and an increase in ADR of 4.5%. All four market classes saw RevPAR climb by at least 5% from Q2 2023, led by increases in occupancy and ADR across all classes.
Among the neighborhoods in Manhattan, Lower Manhattan reported the highest jump in RevPAR of 9.6% versus the previous year’s Q2, driven by a 5.4% rise in occupancy and a 4% increase in ADR YOY.
Midtown South’s RevPAR was up by 9.3% from $262.97 in Q2 2023 to $287.32 in Q2 2024, driven by a 3.9% increase in occupancy and a 5.2% rise in ADR YOY.
RevPAR in Midtown West and Upper Manhattan posted increased by 5.2% and 5.3%, respectively compared to the corresponding quarter last year. At 5.1%, Midtown East had the lowest YOY lift in RevPAR.
Occupancy at full-service hotels outperformed that of limited-service hotels in the second quarter, with YOY gains of 4% and 3.1%, respectively. RevPAR increased 7.3% compared to Q2 2023 for limited-service hotels, while full-service properties posted a 6.9% rise over the same period.
In the second quarter, RevPAR increased 6.9% for chain-affiliated properties, while independent hotels posted an 8.2% surge. The performance in chain-affiliated hotels was led by increases in occupancy as well as ADR, which improved by 4.1% and 1.8%, respectively since Q2 2023.
Relative to chain-affiliated properties, independent hotels witnessed a stronger increase in ADR of 5.2% YOY, but milder occupancy growth of 2.9%.
