NYC Faces Declining EU Demand and Boosted Inventory, Threatening RevPAR

NYC Faces Declining EU Demand and Boosted Inventory, Threatening RevPAR

New York City is battling lower demand from the traditional robust European market and greater room supply, which is beginning a pattern of rate discounting that will challenge RevPAR growth in Q1. Understanding the dynamics of Demand—and the consumers behind it—can help NYC hoteliers improve overall performance.

There’s been a decline in overall online travel search activity from European Leisure travelers to the U.S. starting in October, when year-over-year search Demand* declined by 16%.

Slowed travel to NYC from Europe can be attributed to several influences – but a major factor is higher cost:

  • Stronger dollar means less travel buying power for Europe
    As Euro comes into parity with the Dollar, European travelers are not getting a natural “currency discount” for their trips to U.S. destinations.
  • Higher and rising travel prices
    In addition, the U.S. economy is much stronger and pricing on travel-related items such as hotel rooms are up. Europeans have to pay about 25%+ more for a trip to the U.S. than they did just last year.

NYC is also facing a growing and changing product that traditional hoteliers have to adapt to:

  • Growth in supply of new hotels
    There’s been a jump in “limited mid-service” product to the market along with many boutique, independent hotel products.
  • Airbnb effect
    NYC is the biggest market for Airbnb in the world; while it’s hard to know for sure – this could account for an additive 5-7% of “rooms” to total room supply. (Airbnb is also targeting the Millennial traveler, NYC’s bread-and-butter traveler demographic.)

The Next 60 Days – Target Consumers Shopping for NYC

Demand for the MidEast Region of the U.S., which includes NYC, is down 2.2% for the next 60 days, while NYC itself faces a 3.8 drop in Demand.

Demand from the entire U.S. for NYC is down 1.9%, while demand from the rest of the world is down almost 10% YOY. Although UK travel Demand has declined, there are markets showing growing interest in NYC travel, including Spain.

Demand for NYC by Market with YOY Change

U.S.                                         -1.9%
International (non-US)        -9.5%
Europe                                   -1.9%
UK                                           -27.7%
Spain                                     +6.4%

NYC hoteliers need to look beyond the traditional European markets to emerging traveler sources to target and develop into strong NYC guests.

Top U.S. Market Targets for the Next 60 Days

  • Within the U.S., the Mideast (36%), Far West (18%) and Southeast (17%) are the top regions for Demand and bookings for New York City.
  • Top sources of Demand for NYC come from its drive markets, specifically Washington DC, Philadelphia, Albany, Ithaca and Baltimore.
  • Top Personas Most-Likely-to-Book are Dream Trippers (50-65 years old, higher income) and Self Seekers (25-35 years old, middle income) demographics seeking leisure and culture travel experiences.

Understanding the Impact of international travelers, drive markets and consumer shifts allow hoteliers to make better rate and marketing decisions. During the market transition as Demand shifts and new players enter, it’s critical to be able to identify where and when consumers are shopping for your hotel and when they want to travel. This information allows you to be focused, targeted and more effective with digital marketing budgets for PPC and banner advertising – if you know the consumers to target.

The findings above were presented in a special webinar exclusively for NYC hotels on 2/6/15. Watch the recording here.

nSight offers an easy-to-understand target marketing report on Future Consumer Demand for hoteliers called nCompass. Get more details on a special offer here.

* Demand = Searches or shops by consumers with intent to travel aggregated from 5,000+ global travel sites.