Luxury Hotel RevPAR Exceeds Pre-Pandemic Level in NYC

If, like us, you’ve heard enough about doom cycles, plunging valuations and special servicers this year, let’s head for the express elevator to the penthouse of real estate sectors and tell room service to send up some champagne.

Manhattan’s luxury hotels are back: NYC’s most luxurious digs are raking in the big bucks from a burst of tourism in the Big Apple.

In fact, NYC’s luxury hospitality sector currently is notching a year-to-date RevPAR (revenue per available room) of $334, which exceeds the pre-pandemic level of $297 in 2019—three times higher than the RevPAR in June 2021, according to new data from STR.

Tourists are flooding into Manhattan and business travel is showing a stronger pulse, pushing occupancy and room rates at high-end properties back to the stratosphere.

According to a report in the Wall Street Journal, two of the most famous lodgings in New York—the Four Seasons in Midtown and the Plaza on the edge of Central Park—may be getting ready to join the party.

The Four Seasons, a 52-story tower designed by I.M. Pei in 1993, has been closed for three years—and not just because of the pandemic: the hotel’s owner, billionaire Ty Warner—remember the Beanie Babies? yes, that guy—and the hotel’s manager, Four Seasons Hotels & Resorts, have been locked in a contract dispute that kept the hotel closed after the pandemic ended, WSJ said.

(We’ll pause here to give Ty a shout-out for something he did in the darkest days of the pandemic. When the Four Seasons was closed to the public in 2020, Warner allowed doctors and nurses treating Covid-19 patients to stay at the luxury hotel without charge.)

Most of the Plaza’s hotel space has remained shuttered, including the famous Oak Room bar and a basement space occupied by the Todd English food hall. In 2005, the top floors of the Plaza were converted in a $400M renovation to luxury condos, with 282 hotel rooms remaining in the bottom floors.

Two operators are in the midst of competing to take over the management of landmark hotel, which has a commanding view of Columbus Circle and the park to the north.

According to WSJ, if Warner agrees to a new contract—which the Journal said may happen by end of the summer, according to “people familiar with the situation”—enabling the 368-room Four Seasons to reopen, it could directly determine the winner of the competition to take over the management of the Plaza.

A guy in a tuxedo just arrived with some caviar to go with our champagne (did we mention that the 4,000 SF penthouse suite at the Four Seasons—Ty just reminded us it’s called the Ty Warner Penthouse—in its heyday commanded nightly rates of more than $50K?), so we’ll give you the Cliff Notes version:

The Plaza, built in 1907, was acquired by Katara Hospitality—a wealth fund of Qatar—for $600M in 2018.

According to WSJ, Katara is planning to renovate the hotel after it selects a new manager. The finalists to manage the Plaza are Four Seasons and luxury hotel manager Raffles Hotels & Resorts, which is moving its headquarters from Paris to New York.

If Warner renews his contract with Four Seasons, the midtown hotel will undergo its own renovation, most likely ceding the Plaza management to Raffles, WSJ reported.

According to the report, Katara said “there is nothing definitive at this stage as it’s part of our routine evaluation we undertake across our portfolio.”

Sounds like we’ll need another bottle of champagne before we get to the bottom of this.