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Last year, tourism was the white knight of the New York economy. For the third year in a row, foreign tourists and business travelers swarmed into New York, filling hotels, patronizing restaurants, ringing retailers' cash registers and spurring construction of new hostelries.
This year, the hero has grown haggard, and the effect on the city will be severe. In the first four months, the number of arrivals at the three major airports fell 7%, to 11.2 million. During the same period, the number of hotel rooms sold plummeted by 500,000, or 6.6%.
"These will be relatively tough times for hotels, even though this is still one of the strongest markets in the country," says Thomas P. McConnell, a hospitality consultant with Laventhol & Horwath. "The situation doesn't bode well for the economy."
Hardest hit will be the hotels, since the city will add 3,700 rooms in the next 16 months. And while new strategies are being implemented -- such as face-lifts, larger sales staffs and new ad campaigns -- hotels are reluctantly confronting the fact that they will have to reduce their room rates.
The decline in tourism comes as the rest of the New York economy continues to weaken. In June, the Crain's Index of eight leading indicators remained unchanged, the second poor month in a row.
The index, tracked each month by WEFA Group, a Philadelphia-area consulting firm, stayed flat in June at 112.8 after a slight decrease in May. Of the seven available indicators, four sank, led by commercial and industrial loans. Only stock prices, help wanted ads and financial-sector employment showed any growth.