According to PwC’s latest Manhattan Lodging Index, growth in occupancy, average daily rate and revenue per available room in the New York City borough continued to decelerate in the second quarter of 2024. Still, the analysts described the growth as “robust” in spite of the slowdown.
“The Manhattan hotel market averaged an occupancy level of 87.2 percent in Q2 2024, solidifying a return to stabilized pre-COVID levels,” Abhishek Jain, a principal with PwC, said in a statement. “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."
For the overall Manhattan hotel market, RevPAR increased 6.8 percent year over year during the second quarter of 2024. In comparison, Q1 RevPAR increased 9.4 percent from the same quarter in 2023. Occupancy and ADR continued to advance, albeit at a slower pace than Q1. Q2 annual increases in occupancy were highest in May—up 5.2 percent, and lowest in April—up 2.9 percent. Q2 2024 average occupancy and ADR increased to 87.2 percent and $336.84, respectively, resulting in Manhattan RevPAR jumping to $293.62 from $274.89 in Q2 2023.
Market Classes
Of the four market classes tracked, luxury properties exhibited the most significant year-over-year increase in RevPAR—up 8.3 percent for the quarter, driven by a 6.3 percent increase in occupancy from 76.2 percent in Q2 2023 to 81.0 percent in Q2 2024 and a 1.8 percent increase in ADR from $535.97 to $545.79.
For upscale properties, quarterly occupancy grew by 2.4 percent and ADR by 3.2 percent year over year, resulting in a RevPAR increase of 5.7 percent from Q2 2023. Upper upscale properties experienced a 7.2 percent increase in RevPAR since Q2 2023, driven by a 4.1 percent increase in occupancy and a 3 percent increase in ADR. Upper midscale properties posted a 6.6 percent increase in RevPAR year over year, attributable to an increase in occupancy of 2 percent and an increase in ADR of 4.5 percent. All four market classes saw RevPAR increase by at least 5 percent since Q2 2023, driven by increases in occupancy and ADR across all classes.
Of the five Manhattan neighborhoods, Lower Manhattan had the largest increase in RevPAR since Q2 2023, of 9.6 percent, driven by a 5.4 percent increase in occupancy and a 4.0 percent increase in ADR year over year. Midtown South RevPAR grew by 9.3 percent from $262.97 in Q2 2023 to $287.32 in Q2 2024, driven by a 3.9 percent increase in occupancy and a 5.2 percent increase in ADR year over year. Midtown West and Upper Manhattan posted RevPAR increases of 5.2 and 5.3 percent since Q2 2023, respectively. Midtown East had the lowest year-over-year increase in RevPAR of 5.1 percent.
During the second quarter, growth in occupancy at full-service hotels outpaced that of limited-service hotels, with year-over-year increases of 4.0 and 3.1 percent, respectively. RevPAR increased 7.3 percent since Q2 2023 for limited-service properties, while full-service hotels saw an increase of 6.9 percent over the same period.
RevPAR in the second quarter increased 6 percent year over year for chain-affiliated hotels and 8.2 percent for independent hotels. The improvement in chain-affiliated hotels was driven by increases in both occupancy and ADR—up 4.1 and 1.8 percent, respectively, since Q2 2023. Relative to chain-affiliated properties, independent hotels experienced a more robust increase in ADR of 5.2 percent year over year but milder occupancy growth of 2.9 percent.