City's hotel industry puts itself right back on the map.

HVS International, the global hospitality consulting firm, in conjunction with New York University's Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management, recently completed the 2005 Manhattan Hotel Market Overview.

The Manhattan lodging market experienced significant growth in 2004, with a RevPAR increase of 22% compared to 2003.

From March through December of 2004, the market recorded double-digit growth in RevPAR each month.

At 83.2%, overall occupancy reached close to the historical peak achieved in 2000 (at 83.7%) while marketwide average rate was less than 10% below the 2000 level. Occupancy and average rate in 2005 should surpass 2000 levels.

Due to limited new supply and increased compression resulting from near-maximum-capacity occupancy levels, overall RevPAR will experience double-digit growth for the next few years.

"The New York City hotel industry has again established itself as the forerunner of industrywide success and change," expressed Dr. Lalia Rach, Associate Dean of The Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management.

Cristyne L. Nicholas, President & CEO of NYC & Company concurs, "New York City holds the position of being the number one U.S. destination for overseas visitors."

In 2004, three new boutique hotels entered the Manhattan market: the 187-room Hotel Gansevoort, the 42-room Solita Hotel, and the 110-room Hotel on Rivington. The Regent Wall Street, the InterContinental Central Park South, and the Mayflower closed in 2004; these three properties are expected to be converted to luxury condominiums.

Elad Properties acquired the 805-room Plaza in October 2004, and planned to convert the Plaza into a mixed-use development including a 150-unit condominium and a 348-unit luxury hotel. In addition, the 185-unit Stanhope Park Hyatt closed in January 2005 in connection with its sale for condominium conversion.

Due to the limited number of upscale/luxury lodging facilities available for condominium conversion, as well as the strength of the Manhattan lodging market, fewer conversions should occur in the next few years.

Of the 2,668 rooms that are expected to enter the market in 2005, 2006, and 2007, the majority are anticipated to be limited-service products, while six new boutique lodging facilities are anticipated to open.

Manhattan will welcome the first extended-stay product, the 357-room Residence Inn located in Midtown West in November of 2005.

In view of the historical trends, the continued recovery of the regional and national economies, a favorable exchange rate of the euro against the U.S. dollar, the recent closing of several hotels for condominium conversions and only moderate supply growth, we project that marketwide RevPAR will grow by roundly 17% in 2005.

As the national economy continues to recover, we project that in 2005, Manhattan's occupancy and average rate will exceed the 2000 levels.

"HVS International is pleased to report on the relative strength of the New York City hotel and tourism markets," states Steve Rushmore, President and Founder.

"This incredible rebound after the events of September 11 gives testimony to the reputation the City holds throughout the world as a commercial and cultural center of virtually unrivaled significance."

Rushmore adds, "In 2004, the typical hotel in New York City gained over $100,000 per room in value, which represents more than a 50% increase from the previous year," and that "HVS forecasts that the rise in hotel values in New York City will accelerate during the next several years, surpassing the 2000 level by 2005."

Twelve sales transactions were identified in 2004. Hotel investors currently have an upbeat perspective of the Manhattan lodging market, as occupancy and average rate are expected to experience significant growth over the next few years.

In addition, financing appeared more readily available in 2004, as lenders also seemed to be optimistic about the Manhattan lodging market.