New York City has a busy events calendar on a regular basis, but the annual overlap of the U.S. Open Tennis Championships and Fashion Week likely created additional compression for the recovering market.
It’s difficult to tease out specific demand caused by special events in New York City and general post-pandemic demand recovery, said M. Brian Riley, senior research analyst at STR, CoStar’s hospitality analytics firm, in an email interview. The real answer is complicated, but his initial takeaway is that the city is still working its way back to pre-pandemic patterns, and in this case, that happens to be generally strong after Labor Day.
“It is not only possible, but it is very likely that these two [events] combined resulted in an appreciable gain in market compression,” he said.
The U.S. Open, held each fall in Queens, is the fourth and final competition in the annual Grand Slam tournament. It ran from Aug. 28 through Sept. 10 this year.
New York City’s Fashion Week is a semi-annual event, occurring in the spring and fall and welcomes international fashion designers showing off their collections to buyers and the general public. The event ran from Sept. 7 to Sept. 13.
There’s no standard definition of market compression, but it seems clear from hotel data that when markets as a whole reach occupancy of 90% or higher, it’s compressed, Riley said. That allows hoteliers to be more aggressive with pricing nightly room rates.
It’s important to note that occupancy-based compression isn’t a linear impact, Riley said. Instead, it’s curved. Higher occupancy typically results in “higher-octane” average daily rates. An event, or a combination of events, that lift a market’s occupancy by 5 percentage points will have a greater effect when it pushes an area beyond a 90% occupancy boundary than it does moving from 75% to 80%.
New York City normally sees a large jump in demand this time of year, Riley said. The city is nearing its fall performance peak season, and the U.S. Open and Fashion Week arrive in time to give the season a strong jump start.
Excluding this year’s Labor Day weekend, the past two weeks — and more specifically Sept. 6-13 — had a span of eight consecutive days with occupancy above 90%, Riley said. It peaked at 95.3% on Sept. 9. The ADRs for that eight-day period were $394, a 51% increase compared to August’s monthly average when the occupancy average was 82.9%.
“It is not coincidental that those days had overlap between both the closing week of the U.S. Open and the starting days of the city’s Fashion Week,” Riley said.