+ New York City Travel & Tourism Trend Report +

Transcription

1 + New York City Travel & Tourism Trend Report + SEPTEMBER 2017

2 + Table of contents + Letter from the Chairman & President Highlights 2016: Year in Review 4 NYC Visitation Trends 5 Domestic Visitation 6 International Visitation 7 NYC Travel Segments 8 Business & MICE Travel 9 NYC Travel: Seasonal Trends 10 Direct Visitor Spending 11 Travel & Tourism Economic Impact 12 Hotel Room Performance 13 Hotel Room Demand 14 Hotel Development & Room Supply 15 Trends/Outlook Outlook 17 Visitation Forecast 18 Domestic Market Outlook 19 International Market Outlook 21 What's Next 23 1 NYC & Company New York City Travel + Tourism Trend Report

3 Letter from the Chairman & President Dear Members, Friends and Colleagues, Welcome to the third edition of the NYC & Company Trend Report, which provides a review of 2016 results and focuses on the current and near-term outlook ( ). We are facing challenging times for our industry as international issues exchange rates, visa access and perceptions of the US create uncertainty in the market. At NYC & Company we have worked conscientiously to counter negative messages and perceptions with our campaign New York City Welcomes the World. We now expect to end 2017 slightly above last year, with a net gain in domestic travel and only a modest overall decline in international visitors. As you will see, some markets continue to perform well while others prove that even in difficult times, New York City is the most popular international destination in the US and the number one big-city destination for domestic travelers. Looking forward to 2018 and 2019, we will continue to monitor the forces that can drive down travel intentions with a balanced and strategic focus on domestic and international, business and leisure travelers. As always, the New York City travel and tourism industry understands that there is a balance between security and a strong and thriving visitor economy. This approach is necessary to assure the future of the 383,000 people whose livelihood is sustained by the City s travel industry. We look forward to working with you, our members, to keep New York City top of mind as the leading US urban destination. There is so much to appreciate right now: infrastructure investments; hotel developments; cultural and arts openings; exciting new tourist attractions; the dynamic culinary, design and creative communities that make this city the place visitors of every generation want to experience. We remain optimistic that the strengths that have made our industry prosper will bring us into the next few years in good shape. Emily Rafferty Chairman, Board of Directors NYC & Company Fred Dixon President and CEO NYC & Company 2 NYC & Company New York City Travel + Tourism Trend Report

4 highlights + Year in Review 4 NYC Visitation Trends 5 Domestic Visitation 6 International Visitation 7 NYC Travel Segments 8 NYC Business & MICE Travel 9 NYC Travel: Seasonal Trends 10 Direct Visitor Spending 11 Travel & Tourism Economic Impact 12 Hotel Room Performance 13 Hotel Room Demand 14 Hotel Development & Room Supply 15 3 NYC & Company New York City Travel + Tourism Trend Report

5 2016: Year in Review New York City s travel and tourism sector saw another record-breaking year, passing the 60 million visitor mark with 60.5 million visitors in 2016 and reaching $43 billion in spending. Domestic and international travel both reached new visitor totals during the year. Domestic visitors, defined as traveling 50 miles or more one way or staying overnight, grew by 3.4% to show a gain of 1.5 million more visitors to reach 47.8 million. International visitation was up 3.3% year over year to reach 12.7 million travelers. Bolstered by growth from the City s historically dependable markets in Europe, increases were also driven by emerging markets in South America and Asia. Travel reacts to economic conditions almost immediately, rising and falling with growth. Global GDP growth slowed in many parts of the world even as other regions began to recover. Some markets declined in 2016, but the overall picture remained positive. Most of the City s European markets grew, but saturation in some smaller markets contributed to smaller gains. Exchange rates favored the US dollar making travel more expensive. This was played out in drops in cross-border travel from both Canada and Mexico. Leisure travel continued to be NYC s main source of travelers in Domestic leisure trips were up 3.7% (37.4 million), international leisure travel was up 3.6% (10.5 million). Business travel also expanded: domestic business travel increased 2.3% (10.4 million), while international business travel recovered from a 2015 drop to grow 1.7% in 2016 (2.2 million). Visitor direct spending rose to $43 billion. Visitors spent 1.6% more than in 2015, with increases concentrated in the food & beverage and recreational categories. Per visitor spending declined, but the increase in total visitation balanced the individual declines, especially for international travel. Visitor spending brought local benefits. Travel and tourism activity in the City in 2016 sustained over 383,000 jobs in all sectors of the economy generating nearly $25 billion in wages and salaries for working New Yorkers. Visitor spending generated $1.8 billion in New York State taxes and $4.2 billion in local city tax revenues. NYC households saved an average of $1,925 in taxes thanks to the industry s tax contribution. There were also opportunities in The Asian market grew universally, with India (+10.9% growth) and South Korea (+10.5%) particularly impressive. China, now the second largest inbound market, was not far behind, with 9.3% growth over The South American region was also a highlight with Colombia and Chile driving travel to New York City at record levels for two important developing economies. 4 NYC & Company New York City Travel + Tourism Trend Report

6 2016 HIGHLIGHTS NYC Visitation Trends: Travel was one of the first and strongest signals of the economic recovery following the Recession in NYC, an important barometer market for the both the country s business and leisure markets, saw annual increases in visitation. Over the period , gains averaged 4.1% per year rising from 48.8 million to 60.5 million. All major segments experienced volume growth over this period; albeit, at different levels. Leisure travel outperformed business travel. Domestic overnight travel eclipsed day trip visitation. Domestic and international visitation both improved annually. Both domestic at 47.8 million and international at 12.7 million visitors reached new highs in Since 2010 the composition of the international market has developed to include strong growth from Asia and Latin America while still depending on North America (Canada and Mexico) and Europe for year-round hotel demand. Growth was evident in the number of family travel parties, international vacationers year-round and overnight domestic travelers all drawn by the ever-changing things to do and see. With more affordable accommodations, longer stays mean more wide-ranging exploration of the City. These increases in people and activities support new jobs and investment in the industry. 7 Years of Record Performance (visitation in millions) r Domestic International NOTE: r=revised SOURCE: NYC & Company/Tourism Economics 5 NYC & Company New York City Travel + Tourism Trend Report

7 2016 HIGHLIGHTS 2016: NYC Domestic Visitation A record-breaking 47.8 million domestic visitors came to New York City in Low gas prices, new attractions and the pace of hotel development in NYC supported increases in both day trip and overnight visitation 3.2% and 3.6%, respectively, over Business travel, up 2.3%, was constrained by a still cautious business environment, but increased slightly. The domestic visitor market to NYC is leisure dominated (78%) and defined by three factors: short stays that are often taken over weekends (averaging 2.4 nights overnight only), day trips (48% of market) and repeat drive-distance visitors from the region or along the Amtrak Corridor (Boston to Washington, DC). Top long-haul cities include Metro Los Angeles, San Francisco and Bay area, Miami and Chicago. Drive markets are Philadelphia, Washington/Baltimore, Boston and Hartford/New Haven. Top Domestic Markets (000s) Rank State Visitors (K) % of Total 1 NEW YORK 15,630 33% 2 NEW JERSEY 7,113 15% 3 PENNSYLVANIA 3,385 7% 4 FLORIDA 2,611 5% 5 MASSACHUSETTS 2,380 5% 6 CONNECTICUT 2,265 5% 7 CALIFORNIA 1,850 4% 8 MARYLAND 1,459 3% 9 TEXAS 1,115 2% 10 VIRGINIA 972 2% NOTE: A visitor is defined as traveling 50 miles or more one way or staying overnight. SOURCE: NYC & Company/Tourism Economics/DK Shifflet 6 NYC & Company New York City Travel + Tourism Trend Report

8 2016 HIGHLIGHTS 2016: NYC International Visitation Top International Markets (000s) Rank Country Visitors (K) % of NYC 1 UK 1,239 10% 2 CHINA 951 7% 3 CANADA 928 7% 4 BRAZIL 818 6% 5 FRANCE 745 6% 6 AUSTRALIA 684 5% 7 GERMANY 648 5% 8 ITALY 530 4% The City remains the most visited destination in the US for overseas visitors and total international travelers 12.7 million inbound international travelers visited NYC in 2016, from over 170 nations. Strategic investments in emerging markets have further diversified the market mix of inbound international visitation. The City s traditional pillar of Western Europe is being supplemented with high growth markets from emerging world regions, stretching from Latin America to Asia, the Gulf States and Africa. With many still small, there is significant opportunity for growth. 9 MEXICO 448 4% 10 SPAIN 423 3% 11 ARGENTINA 389 3% 12 SOUTH KOREA 386 3% 13 JAPAN 325 3% 14 INDIA 322 3% 15 IRELAND 253 2% 16 SWITZERLAND 228 2% 17 NETHERLANDS 227 2% 18 SWEDEN 218 2% 19 COLOMBIA 206 2% 20 ISRAEL 203 2% SOURCE: NYC & Company/Tourism Economics 7 NYC & Company New York City Travel + Tourism Trend Report

9 2016 HIGHLIGHTS 2016: NYC Travel Segments New York City attracts business and leisure travel, supports day and overnight visits as well as visiting friends and relatives. Travelers arrive by car, bus, train, plane and even cruise ship. This mixture forms the underlying economic strength of the City s thriving travel sector, and 2016 patterns were no exception. Domestic & International 79% Domestic 21% International International travel makes up 21% of total visitors to New York City. This segment is vital to the local economy: international visitors stay longer, spend more per trip and experience more attractions. NYC is host to the largest domestic day-trip market in the US: nearly 23 million people who travel 50 miles or more each time they visit for the day. Leisure travel accounts for 79% of all visitation to the City. One third of these travelers reported visiting friends and relatives (VFR) as the primary purpose of their trip. Business travel accounts for almost one-quarter of all visits, covering all types of business events and meetings. Nearly half of this segment is made up of delegates, or participants in conventions, trade shows or group meetings. Domestic Day & Overnight Business & Leisure 48% Day 52% Overnight 21% Business 13% Transient 79% Leisure 8% Group 25% VFR 54% Vacation/ Getaway SOURCE: Source: NYC & Company/Tourism Economics/DK Shifflet 8 NYC & Company New York City Travel + Tourism Trend Report

10 2016 HIGHLIGHTS NYC Business & MICE Travel New York City attracts business travelers from regional, long-haul and international markets. Following a downturn during the recession, this sector has recovered momentum and is now performing well. The year 2016 was the sixth consecutive year of growth in the overall business market: 12.6 million business travelers were in NYC last year. This was a 2.2% increase over the previous year. Meetings, incentive travel, conventions, and exhibitions (MICE) have increasingly made NYC a top destination for a growing share of international business as well as the traditionally strong domestic industry. Group bookings at hotels are a pillar of hotel demand and pricing while meeting delegates raise the profile of the City. The Javits Center hosted 99 trade shows and conventions in Other meetings were held in hotels and venues around the City. As the MICE sector evolves by drawing on new industries, changes in the technologies of engagement and responding to the proliferation of new convention centers in the US and overseas, New York City s hospitality industry looks to benefit from new demand Total Business Travel/Meeting & Convention Delegates (in millions) r Total Delegates NOTE: r= revised SOURCE: NYC & Company/Tourism Economics/DKSA/NTTO. 9 NYC & Company New York City Travel + Tourism Trend Report

11 2016 HIGHLIGHTS NYC Travel: Seasonal Trends While the first two months of any year are generally the slowest, NYC's unique travel and tourism sector remains active all year long peaking during the fall and early winter seasons. Weather, events and holiday timing can affect weekly and monthly visitation and hotel performance, but these factors are mitigated by an overall seasonal balance. performance up or down as much as three points as international travelers vacation during these times. The summer vacation season drives domestic and international travel up in Q3, and a mix of returning business travel and holiday shopping combine to make Q4 typically the busiest travel period with a strong domestic visitor presence. The timing of the Easter and Passover holidays in early spring can shift Q Seasonal Travel to NYC % 26% 26% 29% % 25% 26% 31% % 25% 27% 30% % 23% 26% 31% % 25% 26% 29% % 24% 27% 31% % 24% 28% 29% Q1 Q2 Q3 Q4 SOURCE: NYC & Company/Tourism Economics/US Department of Commerce-NTTO/DK Shifflet NOTE: 2016 international shares are preliminary. 10 NYC & Company New York City Travel + Tourism Trend Report

12 2016 HIGHLIGHTS 2016: Direct Visitor Spending Visitors contribute directly to the City s economic well-being. In 2016 direct visitor spending rose to $43.0 billion, up from $42.3 billion in Not surprisingly, spending growth closely mirrors the performance of visitor volume growth: 2016 was the seventh straight year of visitation and spending growth. Visitor spending has increased by more than 50% since 2009, averaging 6.3% annual growth. The share of the visitor dollar spent on food & beverages jumped more than one percentage point, reaching 21.1% in 2016 ($9.08 billion). This marks the first time since 2010 that food & beverage spending has been more than 20% of visitor spending. Hotel spending rose to $11.92 billion, even as the share of total visitor spending slipped to 27.7% in Spending on arts, entertainment and recreation rose to 11.8% share in At $5.06 billion, it is the highest it has been since NYC Direct Visitor Spending (%) 21% Food & Beverage 1% Misc. 18% Local Transportation 20% Shopping 28% Lodging 12% Arts, Entertainment & Recreation Highlights 2016 visitor spending of $43.0 billion was 1.6% higher than in International travelers accounted for 48% of NYC total direct spending, but just 21% of all visitors. Nearly 70% of total direct spending comes from leisure visitors. 11 NYC & Company New York City Travel + Tourism Trend Report

13 2016 HIGHLIGHTS 2016: Travel & Tourism Economic Impact The City s tourism economy generated $64.3 billion in total economic impact in 2016, a 2.3% increase over The travel and tourism sector supported 8.8% of all payroll employment (1-in-11 jobs) in New York City. As a labor-intensive collection of services and professions, travel- and tourism-related jobs represent significant employment in New York City: 383,385 jobs across every sector of the economy, either directly or indirectly, representing a 2.2% growth compared to Wages and salaries rose to almost $25 billion in 2016, a 4.8% increase over In terms of direct employment, that is, the 291,084 jobs that come into direct contact with visitors, travel and tourism is the sixth largest industry in NYC. These direct jobs are found in multiple sectors across the economic spectrum: lodging; food & beverage; arts, entertainment & recreation; air and other local transportation; and a significant number of retail jobs. Indirect and induced employment occurs in many sectors as well, including finance, real estate, professional and business services, information and even education. TRAVEL & TOURISM INCOME COMPENSATION Employment YOY Change Income Compensation (in millions) YOY Change Direct 291, % $16, % Indirect 42, % $4, % Induced 49, % $3, % Total 383, % $24, % SOURCE: NYC & Company/Tourism Economics Travel & Tourism Generates Tax Revenue for New York City Travel and tourism generated $11.5 billion in tax revenues in 2016, including $4.2 billion in local city taxes and $1.8 billion in state taxes, and $5.5 billion at the federal level. Total state and local tax proceeds of $6.0 billion saved the City s households an average of $1,925 in 2016 taxes. TAXES REVENUES GENERATED BY TRAVEL & TOURISM IN NYC (millions $) YOY Change Federal $5, % State $1, % Local $4, % Total $11, % SOURCE: NYC & Company/Tourism Economics 12 NYC & Company New York City Travel + Tourism Trend Report

14 2016 HIGHLIGHTS Hotel Room Performance Six out of every 10 visitors spend at least one night in the City. The more than 37 million overnight visitors in 2016 left a positive mark on the hotel industry. Hotel performance, therefore, represents a valuable gauge of the City s travel and tourism trends. Room-Nights Sold: A record 34.8 million room-nights were sold in 2016, a 3.3% increase over Room Supply: New York City s development pipeline continued to outpace the national investment scene. With inventory growth at 5.5%, total inventory of available hotel rooms in the five boroughs reached 112,500 in Occupancy: 2016 occupancy results showed a dynamic industry with occupancy of 86.9% as supply growth outpaced demand. This was consistently the highest occupancy rate among the top 25 destinations in the US, with particularly strong Q4 results. Average Daily Rate (ADR): Hotel pricing reflected the increased pressures of more supply and a changing market mix with more select service and borough hotels. Following a pattern established in the summer of 2015, despite demand growth, rates on average slipped below prior year levels YOY Change Hotel Room-Nights Sold 33,691,400 34,792, % Hotel Room Supply 106, , % Occupancy Rate 87.6% 86.9% -0.9% Average Daily Rate (ADR) $292 $ % NYC Hotel Room Tax ($M) $ $ % SOURCE: NYC & Company/CBRE/STR 13 NYC & Company New York City Travel + Tourism Trend Report

15 2016 HIGHLIGHTS Hotel Room Demand Room demand as measured by the net number of hotel room-nights sold in any period is one of the best indicators of the trends in the City s visitor economy. In 2016, hotels across the five boroughs sold over 34.8 million total room-nights, a net gain of 1.1 million room-nights over In 2015 and continuing into 2016, the decade of investment in the hotel sector and the addition of hotel capacity has put pressure on occupancy rates and average daily room rates, even as demand rose to record levels. NYC hotels have sold over a million more room-nights every year for the past six years. These additional room-nights represent an average year-over-year growth of 5% over the time frame. Total Room-Nights Sold (in millions) NYC & Company New York City Travel + Tourism Trend Report

16 2016 HIGHLIGHTS Hotel Development & Room Supply New York City has the largest selection of lodging choices in the nation for the individual visitor and the travel and meeting trade. From one night to extended stay, from family suites to business-class accommodations, from pod-like quarters to luxury penthouses, New York City has rooms to suit every traveler s needs and preferences. High demand during the current economic cycle has resulted in a robust pipeline of additional hotel properties in all five boroughs. Eighty hotel properties have opened since 2015, with nearly 150 properties in the development and renovation pipeline. As of September 2017, the active inventory for visitor accommodations stands at over 113,700 rooms with more than 25,000 rooms in the short- and long-term pipeline. The City continues to attract new development ranging from luxury hotels, boutique, and lifestyle brands to select service and economy hotels. The current pipeline covers projects across the five boroughs and represents the full spectrum of hotel experiences. Room Supply in Active Inventory YTD Next Gen (f) Rooms (000s) SOURCE: NYC & Company Borough Hotel Development Total Manhattan Brooklyn The Bronx Queens Staten Island Hotels opened 2015 Sep Hotels in 2017 Pipeline & Beyond Rooms in Current Pipeline (estimates based upon available data) 25,383 16,459 2, , NOTE: f = forecast SOURCE: NYC & Company (as of September 2017) 15 NYC & Company New York City Travel + Tourism Trend Report

17 + TRENDS & OUTLOOK Outlook Domestic Market Outlook 19 Domestic Market Forecasts 20 International Market Outlook 21 International Market Forecasts 22 What's Next NYC & Company New York City Travel + Tourism Trend Report

18 TRENDS & OUTLOOK Outlook The global travel industry continues to evolve with domestic, regional and longhaul travel adding new opportunities for destinations on every continent. The US picture is still bright, but competition for international travelers is increasing while macroeconomic and political conditions create competitive challenges. NYC will remain the most popular destination for international visitors to the US, with more than twice as many overseas travelers annually as other major US cities. Domestic visitation to New York City continues on an upward path as leisure travel strengthens and business travel remains essential. 17 Looking ahead, through the end of 2017 and to 2019, the focus on international travel to the City will be essential. These visitors stay longer and spend more, but their ability to travel can be constrained by weak economic fundamentals at home. An improving global economic picture will be felt over the next two years as inbound travel from key markets recovers. However, current geopolitical concerns have created uncertainty and contributed to negative perceptions of the US as an international travel destination. Together with local conditions, especially weak currencies, the greatest impact is likely to be felt in Mature source markets, NYC & Company New York City Travel + Tourism Trend Report

19 TRENDS & OUTLOOK in Europe and Oceania as well as Canada have slowed, and this year saw notable declines in travel to the US and New York City. Economic concerns also contribute to declining visitation from South America and Mexico over the short term. The longer-term forecast is clearer as global economic conditions improve and travel policies stabilize. (up 2.2%) but slower than the City has seen over the past five years. The pace of growth will pick up in 2018 and 2019 as international travel recovers and picks up speed, while domestic visitation continues to shift from day trips to overnight travel. The forecast for year-end 2017 is mixed: domestic will increase by almost 3% (up 1.4 million), but international visitation will fall by 100,000 (off 1%) compared to final 2016 levels. The overall result is positive NYC Visitation Forecast (in milions) f 2018f 2019f Domestic International NOTE: f=forecast SOURCE: NYC & Company/Tourism Economics 18 NYC & Company New York City Travel + Tourism Trend Report

20 TRENDS & OUTLOOK Domestic Market Outlook Travel patterns in 2017 continued on a path that supports overnight visitation, strong regional day trips and growing family travel. Experience, affordability, and new attractions and things to do support repeat visitation as well as drawing new generations of travelers. Consumer trends that seek experiences over things are a boon for travel destinations, especially big cities. The domestic market forecast for the year is up 2.9% above 2016 at 49.2 million visitors, a record. All the City s domestic inbound markets show positive growth to Domestic business travel was particularly active in 2017, with growth of this important sector rising at 3.6% over 2016 to 10.8 million visitors. The City s economic strengths across multiple industries continue to attract individual and group business in finance, real estate, tech, media and design sectors as well as traditional strengths in retail, fashion, food and association meetings. Economic Factors The outlook for the US economy remains positive with GDP growth holding steady at a moderate rate. With the current (H1 2017) unemployment rate registering just 4.5%, and wages moving upward while inflation remains limited Americans are primed for travel to NYC. This holds for our larger regional markets, as well as for travel from smaller long-haul urban US markets. Day Trip Markets Mainstay markets including the NY metro area (outside the 50-mile radius), Boston, Hartford/New Haven and Philadelphia are all expected to increase in volume. Driven by both business and leisure pursuits, these markets represent travelers familiar with the NYC experience and product. They return to explore their favorite things in NYC: cultural offerings, the culinary scene and big-city shopping. Drive Distance Markets The regional travel market, from Maine to Virginia, has multiple transportation options and is frequently drawn to the City for weekend or get-away travel. Balancing transportation costs with affordability, the evolution of the City s hotel market has made overnight visitation, especially for families and couples, more attractive. Cultural activities, shopping, dining and sports are the highlights of these visits. Overnight and Long-Haul Travel Overnight visitors made up 53% of visitors in At 26 million visitors, this is one million more than last year. More time spent in the City means more opportunity to explore the City s offerings. Alongside the strong business component, overnight travel now includes families and many first-time visitors. Transcontinental travel is exemplified by the strong forecast for Los Angeles. 19 NYC & Company New York City Travel + Tourism Trend Report

21 TRENDS & OUTLOOK Domestic Market Forecasts by DMA (%YOY Change) 2017f 2018f 2019f 2.1% NYC Metro 2.3% 2.1% 1.9% Philadelphia 1.0% 1.6% 3.0% Boston 1.9% 1.5% Hartford/New Haven 1.6% 2.0% 2.0% 3.1% Los Angeles 2.4% 2.6% 3.0% Rest of the US 2.2% 2.0% NOTES: f= forecast, Metro NY travel requires an overnight stay or travel of 50 miles or more. SOURCE: NYC & Company/Tourism Economics, as of September NYC & Company New York City Travel + Tourism Trend Report

22 TRENDS & OUTLOOK International Market Outlook International travel has been the focus of the industry in Global economic conditions from exchange rates to weak GDP growth, high unemployment rates to Brexit had begun to put pressure on inbound international travel in These trends continue in The year began with additional concerns about the effects of protectionist and nationalist policies and actions from the new administration in Washington, DC. While not immediately evident in travel during the first half of the year, leading indicators of the industry (online searches, ticket purchases and advance reservations, and attitudes about the US) now indicate a short-term slowing of inbound international travel to the US and New York City. The latest forecast for New York City in 2017 shows a retreat from 2016 levels, dropping from 12.7 million to nearly 12.6 million. Midyear analyses projected a more severe drop; however, marketing efforts and strategic decisions helped turn this around. Strong business travel, a turnaround in Canada, and the dynamism in China, India and emerging markets are balancing the declines from economically challenged markets in South America, the travel restrictions for the Middle East and political and economic concerns in Europe. Accordingly, 2018 will be a year of international resurgence. Visitation is expected to surpass 2016 levels, with almost all important NYC markets turning positive. The outlook will bring international visitation to 13 million, a 3% gain. Growth will be even stronger in 2019, up 4% to 13.6 million. The trend will be supported by the continued strength in emerging markets and regions, as well as economic recovery in Europe and South America. Macroeconomic trends currently predict a sound global economic picture in The upside for the City is an exceptionally unique mix of visitors. As the potential for international travel evolves globally, NYC will see record levels from market leaders (China, the UK) and newcomers (Colombia, India). The City s focus and activities around the globe remain essential. 21 NYC & Company New York City Travel + Tourism Trend Report

23 TRENDS & OUTLOOK International Market Forecasts (visitation in thousands) Country 2016r 2017f 2018f 2019f UK 1,239 1,159 1,200 1,260 CHINA (PRC) 951 1,002 1,068 1,137 CANADA BRAZIL FRANCE AUSTRALIA GERMANY ITALY MEXICO SPAIN SOUTH KOREA ARGENTINA INDIA JAPAN SWITZERLAND IRELAND NETHERLANDS SWEDEN ISRAEL COLOMBIA DENMARK BELGIUM NORWAY AUSTRIA CHILE FINLAND PERU NOTES: r=revised, f= forecast, Ranked by 2017f volume. SOURCE: NYC & Company/Tourism Economics, as of September NYC & Company New York City Travel + Tourism Trend Report

24 TRENDS & OUTLOOK What's Next Opportunities The scope, diversity and depth of New York City s international travel market buffers the industry from localized conditions and reactions to economic and political trends. Strategic attention to mature markets and emerging opportunities helps balance seasonal travel, increase year-round hotel utilization and support spending in all five boroughs. Broad-based recovery in the UK and the Eurozone (highlighted especially by the recovering value of the pound and euro against the US dollar) together with pent-up consumer demand will make travel to NYC a renewed priority for the European market. All the major European markets will pick up in 2018 and The City will also see a return to growth from Australia, Japan and South Korea. At the same time, the Canadian market will continue the upward trajectory begun in The exchange rate has stabilized and the increase in airlift and strong partnerships will support a return to growth from Canada. International business travel continues to grow in NYC. A focus on MICE in Europe, Asia and Latin America will keep the City in the consideration set for important international business. Individual and group business is projected to grow an average of 2% a year in 2018 and 2019, to 2.24 and 2.29 million, respectively. Together with the foundational domestic business and trade show/meetings market, business travel in 2017 should reach 13 million travelers and climb to 13.4 million by Domestic leisure travel from regional and long-haul markets remains essential to the industry performance. Accounting for nearly eight in 10 visitors, domestic travel is positioned to see sustained growth in 2017 (up 2.9%), 2018 (up 2.7%) and 2019 (up 2.3%), adding over 1.4 million visits annually. With more domestic visitors staying overnight, the economic impact of this market increases as well. Developing international markets also offer opportunities for the NYC travel and tourism industry. China has moved into second place behind the UK as the largest inbound NYC market. Group travel remains the main driver, but Chinese independent travel (FIT) and younger travelers are changing the experience of hosting Chinese visitors. South Korea, which entered Visa Waiver in 2009, should see growth pick up over the next two years to reach over 23 NYC & Company New York City Travel + Tourism Trend Report

25 TRENDS & OUTLOOK ,000 visitors by The third big opportunity in Asia in potential size is India. By 2019, the Indian market is forecast to hit 392,000, essentially doubling from 2011 volume figures of 200,000. At the same time, emerging markets in Africa and Southeast Asia remain firmly focused on NYC as their top destination in the US. Latin America, from Mexico to South America, presents a mixed picture. Politics and economics will remain challenges for Brazil, Argentina and Mexico. Smaller markets, including Colombia and Chile, offer new opportunities for growth. The problems faced in 2017 and 2018 look to reverse in 2019, bringing these long-term source markets back to NYC in near record numbers. Gastronomy or culinary tourism and cultural activities are important drivers of urban travel and have become major components of the authentic and local experiences motivating destination choices. New York City is the obvious choice for the experiential traveler from domestic and international markets. Over 24 million visitors annually contribute to the City s cultural life, while a focus on exploring culinary traditions and food history is rising in prominence as well. Challenges No strategic forecast for travel is without its challenges. Political uncertainty characterizes both US and global markets. Overseas the effects of Brexit and other geopolitical alliances have already shown up in exchange rates and the relative cost of a visit to New York. The volatility in many foreign currencies against the US dollar has put pressure on travel from UK, Canada, Europe, Brazil, Japan and Argentina. A series of national elections this year and next, including the UK, France, Germany, Italy, Mexico and Turkey, also creates uncertainty about economic growth and the ability to travel. Since the beginning of 2017, the perception of the US as a travel destination has been eroded by a series of policy and legal moves designed to address trade, immigration, restrictive travel bans and access to visas or border entry. For New York City in 2017, the effect was evident in the 6% drop in Mexican visitors arriving by air and the 25% drop in visitors from the Middle East (excluding Israel). It also contributed to the reluctance of many European travelers to schedule trips to NYC in the second half of the year. Other countries, especially those where visas are required for entry, may also face challenges in 2018 and The industry is watching this situation closely. Finally, while most economists and Americans remain optimistic about the US economy, there are concerns about continued GDP and productivity growth, fiscal stimulus and infrastructure investments, wage growth and inflation. A downturn or pull back in any of these can turn back the dial on travel intentions. 24 NYC & Company New York City Travel + Tourism Trend Report

26 + This report was prepared by the NYC & Company Research Department for the travel industry, to aid NYC & Company members and stakeholders in planning and product development for New York City. + + The sources include data from Tourism Economics, an Oxford Economics company; the US Department of Commerce National Travel & Tourism Office; DK Shifflet; Smith Travel Research; CBRE (formerly PKF Consulting), VisaVue and the Bureau of Labor Statistics. All figures, estimates and forecasts are subject to revision as conditions develop and additional or historical data become available. Due to rounding, there may be minor discrepancies between estimate/forecast numbers and calculated totals. NYC & Company 810 Seventh Ave, 3rd fl New York, NY nycgo.com To learn more, please contact us at research@nycgo.com 2017 NYC & Company, Inc. Not for reproduction or distribution without written permission All Rights Reserved. 25 NYC & Company New York City Travel + Tourism Trend Report