While growth in occupancy, ADR and RevPAR in Manhattan was strong, it continued to slow in the second quarter. According to a recent PwC study, occupancy at luxury hotels benefited from increased demand, while ADR growth at lower-cost hotels improved significantly.
RevPAR improved 9.4% across the Manhattan market in the first quarter, while it increased 6.8% in the second quarter compared to the same period last year. According to the report, second-quarter annual occupancy increases were highest in May at 5.2% and lowest in April at 2.9%.
The Manhattan hotel market recorded an average occupancy rate of 87.2% in the second quarter, indicating a return to stabilized pre-pandemic levels.
“While RevPAR growth has slowed significantly in the first half of 2024, existing hotels are expected to benefit from a minimal expansion in hotel room supply over the next few years, potentially leading to price compression in the market,” said Abhishek Jain, Principal at PwC.
Of the four market classes, luxury hotels reported the highest year-over-year RevPAR increases, up 8.35 for the quarter, driven by a 6.3% increase in occupancy from 76.2% in Q2 2023 to 81% in Q2 2024 and a 1.8% increase in ADR from $535.97 to $545.79.
For upscale properties, quarterly occupancy increased 2.4% and ADR improved 3.2% year-over-year, resulting in a 5.7% increase in RevPAR from Q2 2023. Upscale properties saw a 7.2% increase in RevPAR from Q2 2023, driven by a 4.1% increase in occupancy and a 3% increase in ADR. Upper-mid-range properties saw a 6.6% increase in RevPAR from Q2 2023, driven by a 2% increase in occupancy and a 4.5% increase in ADR. Across all four market classes, RevPAR increased by at least 5% from Q2 2023, led by an increase in occupancy and ADR across all classes.
Among Manhattan neighborhoods, Lower Manhattan reported the highest RevPAR increase of 9.6% over the second quarter of last year, driven by a 5.4% increase in occupancy and a 4% increase in ADR year-over-year.
Midtown South’s RevPAR increased 9.3% from $262.97 in the second quarter of 2023 to $287.32 in the second quarter of 2024, driven by a 3.9% increase in occupancy and a 5.2% increase in ADR year-over-year.
RevPAR in Midtown West and Upper Manhattan increased 5.2% and 5.3%, respectively, compared to the same quarter last year. Midtown East saw the smallest year-over-year RevPAR increase at 5.1%.
Occupancy at full-service hotels outperformed that of limited-service hotels in the second quarter, with year-over-year increases of 4% and 3.1%, respectively. RevPAR increased 7.3% at limited-service hotels compared to the second quarter of 2023, while full-service hotels saw a 6.9% increase over the same period.
In the second quarter, RevPAR at chain hotels increased 6.9%, while independent hotels saw an increase of 8.2%. Performance at chain hotels was driven by an increase in occupancy as well as ADR, which improved by 4.1% and 1.8%, respectively, since the second quarter of 2023.
Compared to chain hotels, independent hotels reported a stronger year-over-year increase in ADR of 5.2%, but lower occupancy growth of 2.9%.
