Hotel developers are more perturbed by Airbnb and construction costs than a revised Trump travel ban that could cost New York City some 300,000 foreign visitors this year.
“The Airbnb situation is threatening New York City in a very aggressive way, by far more substantial than this five nations ban,” said Morris Moinian, founder of Fortuna Realty Group, which has developed several hotels in Manhattan. Abraham Hidary, CEO of Hidrock Properties, added, “The bigger problem is the increase in costs. Labor and real estate costs are way up.”
The two were speaking after President Donald Trump signed a revised version of an order than bans travel from six Muslim-majority countries.
In 2016, New York City tourism hit a peak high with 60.3 million visitors to the city. According to the city’s official marketing firm, New York & Company, the travel ban will result in 300,000 fewer visitors to the city in 2017.
The agency estimated the loss of international visitors could cost upwards of $600 million in lost revenue.
However, NYC & Company still expects a slight increase in tourism from domestic visitors. The agency forecasts that the city will attract 61.7 million visitors, up from 60.7 million in 2016, with an increase of 1.3 million domestic visitors offsetting the decline of foreign travelers.
Hidary believes that the worry over tourism is partly over not looking at the facts enough. “People tend to read the headlines and not read the article at all,” he said.
He admitted that there is more hotel supply than demand, resulting in slightly lower room rates, but said the market is steady. “It’s a legitimate issue. I think it’s less legitimate from a tourism standpoint. For New York City hotels, it’s a really minimal impact. If we do lose 300,000 foreign tourists and gain domestic tourists, then the market’s still fine, we’re not going to see a major impact,” he said.
Calling a dip of 300,000 “a drop in the sea,” Moinian said the slated closure of the Waldorf Astoria, which has 1,000 plus rooms, as well as the pricey rates for luxury hotel rooms will offset any drop in international tourists.
“Truly, it will not have an impact on two, three, four and five-star hotels, even budget hotels. I don’t believe we’re going to lose out on anything in a serious nature.” And despite his concerns about Airbnb, Moinian said he had no qualms about continuing to invest in the hotel market. His firm relaunched its Hayden Hotel in Chelsea last week and is planning a soft opening of Hotel Henri in the Flatiron District.
According to the Baird/STR Hotel Stock Index, early-year industry performance is falling in line with expectations for slight occupancy declines and muted RevPAR growth.
“Mixed signals from the new administration — tax relief on one hand, a travel ban on the other — is likely not helping investor sentiment, but thus far, there hasn’t been a noticeable impact on data. We’ll continue to monitor demand numbers, specifically in the coastal markets, to see if any trends emerge,” said Amanda Hite, STR’s president.