Business travel

New York hotel revenue held back by slow return of international business travel

China-imposed restrictions have limited hotel revenue in New York, according to State Comptroller Thomas DiNapoli’s office. In 2019, each Chinese tourist spent an average of $3,000, nearly 60 percent more than the average spending of other international visitors, the bureau said.

“We’ve been the city hardest hit by Covid,” said Vijay Dandapani, president of the New York Hotel Association. “We still don’t have business trips like before. It’s 50 to 60% of what it was before.

Dandapani predicted the city will “come back” by 2024. Hotels may need to take extra steps to curry favor with travelers to boost revenue next year, he said.

“The key factor in transforming business travel in New York is bringing back many conferences from the past that still haven’t returned,” said Yariv Ben-Ari, partner at Herrick Feinstein’s real estate firm. “These are key factors in bringing business travel to New York.”

Despite insufficient revenue from international business travel, the tourism industry has restored somewhat thanks to the increase in leisure travel. A report by Deloitte found that the rise in Covid-19 variants since the summer of 2021 has caused many people to delay their travel plans. As the omicron variant and others have waned, more and more people are traveling again and heading to tourist destinations, according to the report. According to the US Travel Association, 32% of American travelers said in a survey that leisure travel would be a high budget priority in the next three months.

A perception of increased crime in New York City, which Mayor Eric Adams campaigned on when he ran for office, could discourage some people from visiting. According to the American Hotel and Lodging Association, the city’s hotel revenue from leisure travel is expected to decline 4% this year compared to 2019, a more modest decline than revenue from business travel.

Ben-Ari said many business leaders are watching the upcoming elections closely to see how elected leaders will affect their businesses. Leaders could wait to invest more in local hospitality, he said.

A silver lining in all this uncertainty is increased interest from foreign hotel operators looking to acquire space in New York.

“Internationally, the hotel community is very optimistic in New York City,” Ben-Ari said. “Now that they see the trend of leisure travel picking up, they expect business travel to return to New York for the foreseeable future.”