April 13th, 2006
Big Apple tourism is hot while local restaurants hunger for better sales; Manhattan’s hotel business is booming, but full rooms aren’t translating to full tables in the city’s eateries as operators grapple with increased costs and stiffer competition
A surge in travel and tourism has helped to superheat the recovering New York metropolitan hospitality market, but the region s dining-out business remains lukewarm by comparison.
While many foodservice operators in the area are reporting modest sales gains for 2005 over last year’s results, those increases do not echo the business boom that has been resounding across the city’s hotel industry.
“Hotels in New York are doing better than good–they’re having the best year ever,” says John Fox, senior vice president for PKF Consulting, a hotel advisory firm based in New York.
For the nine months ended in September, occupancy rates at New York hotels have been averaging about 85.4 percent, up from the 81.5 percent reported for the same nine months a year ago, Fox says.
At the same time, the average room rate has climbed to $225.07, an increase of about 15.5 percent over last year’s figure. Revenues have risen more than 20 percent.
“Hotels have more than bounced back from 9/11,” Fox says. “We’re way above pre-9/11 numbers.”
While a number of local foodservice operators report some forward sales momentum in 2005–aided by the rebound in travel and tourism–others say that competition and consumers’ restrained spending are keeping the brakes on more serious acceleration.
Meanwhile, a variety of rising costs are compressing the bottom line for many local restaurants–another market factor expected to be a hot topic among attendees at the International Hotel/Motel & Restaurant Show Nov. 12-15 at the Jacob K. Javits Convention Center in Manhattan.
“Sales are pretty even year to year,” says Drew Nieporent, head of Myriad Restaurant Group, which operates such popular Manhattan restaurants as Montrachet, Tribeca Grill and Nobu. “But expenses like food, labor and real estate keep increasing. It’s not a great formula.”
“Although sales may be up, profits continue to erode,” agrees Chuck Hunt, executive vice president of the New York City chapter of the New York State Restaurant Association.