Fears of an oversupply of accommodations in Manhattan appear to be overblown. New analysis from PwC for the second quarter of 2018 shows that average daily rates (ADR) are on the rise, despite demand for short-term rentals.
The report showed an increase in ADR of 3.3 percent for the first half of the year. RevPAR is also on the rise, growing 5.5 percent during the first six months of 2018.
Occupancy rates in Manhattan reached 90.7 percent in the second quarter, which was the highest level tracked over the last 24-month period.
Broken down by category, occupancy levels at luxury hotels were flat compared to the previous year, however, ADR increased by 4.3 percent.
Upper Upscale hotels posted low ADR gains and reported just a 1.9 percent increase in RevPAR with minimal occupancy gains.
Upscale and Upper Midscale experienced RevPAR growth of 5.8 percent and 4.5 percent, respectively, and ADR growth of 4.5 and 4.7 percent, respectively. Upscale hotels had the highest growth in occupancy rates, with an increase of 1.3 percent. However, Upper Midscale lodging properties experienced a decline of 0.2 percent during the second quarter.
Full-service hotels experienced the greatest increase in RevPAR in comparison to limited-service properties. While limited-service properties experienced increases in ADR that exceeded full-service hotels, occupancy rates that remained flat stalled gains in RevPAR.
There is still a great demand for independent hotels. Chain hotels lagged behind in terms of both occupancy rates and ADR growth.
Occupancy posted gains of 0.6 for chain-affiliated hotels while independent properties gained 1 percent. ADR increased by 3.2 and 3.8 percent, respectively.
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