Tired of being stuck at home in Bologna, Italy, Frederico Lelli decided in January to book a summer trip to New York City with his children, his cousin and his cousin’s wife. He’d been to the city five times already, but Lelli wanted to introduce his family to the Big Apple.
On Tuesday, the Lellis had breakfast at a Dunkin Donuts in Times Square, sampling the chain restaurant’s signature fried dough for the first time. Then they headed downtown to check out Wall Street, Chinatown and Little Italy before seeking out more off-the-beaten track destinations.
“We wanted to get some freedom back and why not come to New York,” Lelli said. “We knew when we booked the trip there was some risk of cancellation and things like that, but why not take the risk.”
Today, millions of people like Lelli have decided to follow the same path and, in a sign of hope for the city’s economy, tourism to New York City is rebounding much stronger than expected.
Hotel occupancy for the week of June 25 hit 87% of pre-pandemic levels, the highest of any major market in the country, according to STR, which tracks travel and tourism. Room rates for that week averaged $309 a night, higher than any other U.S. market outside of Hawaii and the Florida Keys.
And Times Square is seeing an average of 300,000 visitors a day, not far from the 365,000 people a day it averaged in 2019. One Sunday in June, it topped 400,000 visitors, just above the 2019 crowds for the same day.
As a result, the city’s tourism arm NYC & Company raised its forecast last month, predicting that visitors this year would slightly exceed its previous prediction of 56 million (compared with only 33 million in 2021). NYC set a record for tourists in 2019, with just slightly more than 66 million visitors in the year before the pandemic.
This unexpected summer tourist boomlet has provided a lifeline to hotels whose bottom line was devastated by pandemic shutdowns. Some restaurants in tourist areas that survived the last two years have also reported sharp upticks in business.
“Travelers are beginning to return to New York and they are coming from far afield,” Fred Dixon, CEO of NYC & Company said last week at a forum hosted by the Center for an Urban Future. “There is an enormous amount of pent up demand domestically and internationally among people who have not been able to travel.”
The desire to travel by domestic and international tourists like the Lellis have defied concerns about the soaring costs of travel. Surveys by AAA show record travel for Memorial Day and the July 4th holiday in the United States.
Business travel has also rebounded, surprising those who speculated that virtual meetings would permanently shrink the need for it. American Airlines, a major carrier at LaGuardia and JFK airports, recently told investors that business travel had reached 80% of 2019 levels and would soon reach 90%.
Who’s Afraid of Crime?
In something of a surprise, a sizable chunk of missing visitors are those from the New York metro area, a deficit tourism officials attribute to new fears of crime sparked by a constant drumbeat in the media. Crime has risen in the city’s pandemic era, but remains historically low compared to previous decades; fear of crime, however, has risen steadily.
“We need the suburbanites to be comfortable coming into the city to support Broadway, to eat in our restaurants, to go to Little Italy in the Bronx,” Dixon said. Historically, such day trippers account for half of all visitors, he added.
Dixon took a media tour of Europe in the spring, a week after the subway shooting in Brooklyn, sure that the journalists he talked to, especially those in France and the United Kingdom, would be preoccupied with the incident. He prepared himself for a barrage of questions on crime and gun violence.
“Over five days it didn’t come up one time,” he said.
But in the New York metro area, residents are carefully following media coverage of crime, he added, and the agency’s sentiment tracking surveys show they are concerned about their safety.
Mark Fox, who runs the Fox Lifestyle Hospitality Group, which owns restaurants like Manhattan’s White Oak Tavern, agrees. He lives in Nassau County and his friends there question the choices made by the professional office workers who are Fox’s core customers.
“Those that have not or are rarely in the office have a very dim view of public safety,” he said. Not only don’t they venture into Manhattan, “they do not allow their 18- to 22-year-olds to come to the city,” he said.
Survival of the Fittest
Further complicating this summer’s tourism boomlet is the fact that fewer businesses — and fewer workers — are benefitting from it. Jobs in the leisure and hospitality sector remain far below pre-pandemic levels.
The survivors of the pandemic are better off because of the hollowing out of the tourism industry. The sharp uptick on hotel rates, for example, is partly a result of the hotel rooms that closed during the pandemic and which have not reopened, estimated at about 10,000.
It is the same story for restaurants.
Fox notes that his eateries are seeing business travelers, weekend visitors from elsewhere in the country and now international travelers, who have come in increasing numbers since the U.S. government dropped its requirement for negative Covid tests before boarding inbound flights.
Fox’s six-unit group was down 60% from 2019 revenues last year. Now it is 20% ahead of that year.
“A lot of places closed and the places that were able to reopen and maintain strong Covid policies have enhanced consumer confidence,” he said. “As the economy recovered, they benefited from that confidence and fewer competitors in the market. That’s the main driver of our success.”
In part because of all those closed hotels and restaurants, employment in the sector remains depressed.
An analysis prepared by the Center for an Urban Future shows the city remains 66,000 leisure and hospitality jobs below the 2019 record, and that doesn’t include positions at airports and retail stores that haven’t been restored. The sector accounts for about a third of the city’s gap with the 2019 peak.
The loss of those jobs is in large part the cause of the city’s inequitable recovery. Two-thirds of all leisure and hospital jobs are held by people of color; half are immigrants. Nine of out 10 jobs in the industry are open to people without a bachelor’s degree, the Center notes.
And while soaring and persistent inflation has yet to cut into travel demand, Dixon thinks that 2023 will see only modest growth. Pent up demand will be met, and higher prices will deter some people from expensive trips, he predicts.
But many businesses that cater to tourists remain confident about the future.
The lack of office workers in Times Square remains a problem for Virgil’s Real Barbeque and Carmine’s Italian Restaurant, the famed family style eatery. But Virgil’s is back to 2019 revenue and Carmine’s has slightly exceeded its 2019 volume, said owner Jeff Bank.
Later this year, Bank plans to open a 13,000-square-foot fish restaurant on West 43rd Street between Sixth and Seventh avenues.
“Absolutely I’m optimistic about Times Square. Otherwise we would not be doubling down on this location,” he said.