NEW YORK—RevPAR fell 4.4% year-over-year in the fourth quarter mainly due to a decline in pricing power across the board at Manhattan hotels, according to PwC’s Manhattan lodging index. Despite persistent growth in lodging demand, an outsized increase in new hotel rooms kept a lid on hotel occupancy during the fourth quarter.
For the year, Manhattan RevPAR fell 3.9%, with ADR and occupancy posting declines of 2.8% and 1.2%, respectively.
“Just over 3,800 new hotel rooms were added to the Manhattan lodging market last year. This, coupled with an increasing percentage of Manhattan’s total lodging demand coming from the more price-sensitive leisure customer, is continuing to impact hotels’ abilities to drive meaningful increases in room rates,” said Warren Marr, managing director, U.S. Hospitality & Leisure, PwC.
Upscale properties exhibited the most notable decline in RevPAR during the fourth quarter.
Decreasing by 6.2% from prior-year levels, upscale RevPAR performance was largely driven by a decline in ADR of 5.5%. For upper-upscale hotel properties, where occupancy fell by 0.5%, Q4 RevPAR was further impaired by a decline in ADR of 3.1%.
While luxury and upper-midscale properties posted the smallest declines in RevPAR of 3.4% and 3.3%, respectively, positive contributions from occupancy of 0.3% and 0.6% were offset by declines in ADR of 3.7% and 3.8%, respectively.
During the fourth quarter, all five Manhattan neighborhoods experienced year-over-year declines in RevPAR. While ADR fell across the board, the Midtown East submarket posted the largest ADR-driven decline in RevPAR of 8.6%.