New York Hotels are recently experiencing a phenomenon where hotel rooms are getting cheaper by the day. This could be attributed to a downturn in tourism because of a weak global economy amidst the strengthening of the dollar, or perhaps there is a simpler reason: the number of hotel rooms are far exceeding the demand. There is a 21% surge in the city’s room count can be attributed to an increase in hotel construction in the city.
New York City remains popular to developers and investors despite the expected downturn in tourism for at least a year. New York now has over 100,000 hotel rooms with 27,000 more planned or under construction. “If you’re trying to get a room during peak times, it’s still going to be very expensive, but there will be softer times when you can get bargains, which wasn’t the case during the last peak,” said David Loeb, a lodging analyst at Milwaukee-based Robert W. Baird & Co.
Over the past year, new hotels have been introduced and there are plans of opening new hotels and added rooms this year and the next. This overabundance of supply is driving down prices for hotel rooms especially in areas like Brooklyn where some hotels are forced to offer cheaper rooms in order to entice tourists.
“When you have this many more hotels, especially in submarkets like Times Square, there is a psychological effect on the people who are setting rates,” Loeb said. “They feel less confident to raise prices and risk sending you down the street to the new competition.”
Although, there are steps that some companies are taking in order to curb this market trend. Some hotels are even converting rooms to time-share spaces, which will likely increase the value of the property. At least that’s what the hotels hope for. They expect that supply will drop again soon, and that this is only a temporary trend.
It’s a simple case of “supply and demand” where the supply far exceeds the demand especially when there are alternatives to hotels like hostels and several couch-surfing enterprises that are available on the internet.
In the meantime, for people who plan on taking advantage of the low prices, hotels like the Chelsea Savoy Hotel, Colonial House Inn, and Cosmopolitan Hotel-Tribeca are offering their rooms for cheap. And if you’re still looking for more affordable options, you could always check out hostels like the Central Park Hostel, Chelsea Center Hostel, and Chelsea International Hostel for even better deals.
[Image via Soul of the South]