Since the COVID-19 epidemic began, the Newark Airport Hotel Market has undergone significant changes. A slow but steady recovery has been achieved by the hotel industry due to changes made in the supply of hotels in this submarket and the rebounding passenger numbers through Newark Airport. Newark Airport has recently expanded and will continue to do so in the future. This is a good sign.
The Hotel Landscape is Changing
The hotel demand in the Newark Liberty International Airport submarket also decreased significantly when the COVID-19 pandemic began to affect the passenger traffic at the airport. It was an excellent opportunity for assets within the market who were either nearing brand mandated PIP renovations or had reached a plateau in ADR to embark on significant renovation projects. In April 2021 the former Hampton by Hilton, located on Spring Street and directly west from U.S. Route 1,9, was converted into a Holiday Inn Express. In May 2022 the former Holiday Inn also located west of U.S. Route 1-9 was renovated and transformed into a Hampton by Hilton. Lastly, the former Country Inn & Suites, located southeast of Newark Airport and adjacent to The Mills at Jersey Gardens, was renovated and converted to a Hampton by Hilton in December 2022. It is also worth noting that a Home2 Suites by Hilton opened in the submarket in January 2019, while a Comfort Inn & Suites opened in November 2023, increasing the number of available midscale hotel rooms in the market by almost 15%.
Hotel Submarket Recovers
Newark Airport’s hotel submarket is recovering slowly but steadily despite modest increases in supply. This recovery has been aided by the renovation of numerous assets, as well as the increase in passenger traffic. According to STR, by the end of 2023, occupancy rates in this airport market had risen to just below 78%. This is a level that is just a little below the prepandemic peak of almost 84%. The occupancy data for 2024 show further improvements, but still lag behind the pre-pandemic level. Market occupancy is not fully recovered yet, but ADR for the market has shown a different trend. ADRs for the Newark Airport Hotel submarket increased in 2023, by nearly 10%. ADR growth declined significantly in 2024. However, it remained positive. ADR gains of over 15% in the market resulted in a RevPAR in 2024 that is roughly $15 higher than before the pandemic.
A number of factors are responsible for the slow recovery in occupancy, including an increase in hotel supply. A permanent shift in the office dynamics has also been observed, with remote-work policies continuing to be implemented. This continued remote-work has also delayed the return of training groups, as well as other corporate-groups. The strong leisure travel in New York City, which is nearby, has helped to offset the delayed recovery for commercial and group demand.
Market RevPAR Analysis
A comparison of Newark’s RevPAR to the national average shows how much demand declined at the beginning of the COVID-19 Pandemic. It also reveals where the airport submarket stands in terms of its recovery. Newark has always had a higher RevPAR than the national norm. However, the metro region suffered greater losses during the COVID-19 pandemic. It has also been slower to recover. According to STR, demand growth, strong ADR gains, and improvements in RevPAR have all contributed to an improvement of RevPAR by 2024. This RevPAR registered a 119% increase compared to the average national RevPAR. This level is just below the peak pre-pandemic of 120%. There is still room for improvement.
Newark Hotel Market RevPAR Nearing Full Recovery after 2020 Decline
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Newark Airport Upgrades
Newark Airport’s hotel submarket performance is directly related to passenger traffic levels, which exceeded pre-pandemic airport levels in 2023. Airport officials claim that passenger traffic was relatively stable in 2024, but declined by 3.0% and 1.6% respectively in February 2025. Recent minor declines in travel are due to the economic uncertainty caused by tariffs imposed by the federal government. This has resulted in a decrease of both domestic and international travel. Upgrading the airport’s infrastructure is crucial to maintaining steady passenger traffic growth.
Newark Airport has seen a range of improvements over the past decade. Terminal A Redevelopment Program, completed in 2023 at the beginning of that year, became fully operational on August 20, 2023. The $2.7-billion, one-million-square-foot Terminal A is LEED Gold-certified and features 33 new gates, improved airside and landside infrastructure, and various state-of-the-art passenger amenities.
As part of the EWR Vision Plan, ongoing projects include construction of a new AirTrain and plans to renovate Terminal B and enhance Terminal C.
- Plans for the AirTrain Newark Replacement Program, which had been discussed for years, were announced by August 2023. The new AirTrain will link the airport terminals, rental car facilities, hotel shuttle areas, and RailLink Station (where NJ Transit rail lines and Amtrak raillines are located) with the new system. The AirTrain system is scheduled to be operational by 2029, at a cost of approximately $570 million.
- In October 2024, the Terminal B Redevelopment Project and Terminal C Enhancement Project were announced. No timeline was given. Port Authority of New York/New Jersey reports that these projects are expected to support passenger traffic growth in the coming years.
The Terminal A expansion has allowed for increased passenger traffic. Terminal B, Terminal C and the anticipated Terminal B projects will also allow for more growth. AirTrain construction will improve travel efficiency to the airport as well access to hotels within the submarket. The local hotels should benefit from the construction demand that will occur as these upgrades take place, and also increased visitor numbers once completed.
Market Outlook
Newark Airport’s occupancy hasn’t yet recovered to its pre-pandemic level, but ADR growth in recent years has been strong, leading to a RevPAR market in 2024 that is significantly higher than the peak before the pandemic. There are also no new hotels planned or under construction in the airport submarket. This should help to prevent any major disruptions.
Since the COVID-19 epidemic began, the hotel supply in New York City has been significantly reduced. The number of hotels in Manhattan and outer boroughs has either been permanently closed or converted into temporary shelter housing. This creates a potential overflow to Newark during peak periods, especially. The new federal policies are expected to lead to a decline in tourism and travel nationwide by 2025. However, it is still unclear how this will impact the Newark market. The outlook for the Newark Airport Hotel Market is positive at this time, given the high passenger traffic at Newark Liberty International Airport and the recent upgrades to the airport.
HVS transforms data into powerful insight that drives your success. Our unique methodology involves conducting interviews with local market participants to gather real-time insights. This gives us a deeper understanding of the markets we work in and gives you a competitive advantage. HVS gives you access to the latest data that enables you to make informed decisions. Please contact us for more information on the Newark market, or if you need help making an investment decision that is aligned with both your specific goals as well as your risk tolerance. Cole Masler.
Cole Masler He is a Consultant and Valuation manager at the HVS New York Office. He graduated from The Ohio State University in December 2020 with a Bachelor of Science in Hospitality Administration/Management. Cole was active in the Hospitality Management Association at Ohio State. Cole worked as the Assistant Hotel Director at the Three Village Inn in Stony Brook and in various positions in the restaurant and catering industry before joining HVS. Contact Cole at +1 (516) 492-8595 or cmasler@hvs.com.
This article was originally published on HVS.
