The Empire State Building’s owner reported a 12% decline in visitors to its popular observatory last quarter, which officials attributed to poor weather and the late Easter holiday instead of President Donald Trump’s trade war possibly deterring tourists’ visits to the city.
“We have not detected any significant shifts in demand that we can’t ascribe to logical events like really bad weather,” said Tony Malkin, chief executive of Empire State Realty Trust, on an earnings call Wednesday. Cloudiness that impaired visibility over Presidents and Martin Luther King Jr. Day weekends was cited as an example.
“Everyone can agree that we’re in a unique set of circumstances, and we recognize that could have an impact, and we don’t feel like now is the time for us to call it,” he added
Malkin didn’t address whether recent reports that the tower plans to experiment with surge pricing is having any impact on observatory traffic.
The Empire State Building observatory is one of New York’s top tourist attractions and, on a per-square-foot basis, the city’s most valuable real estate. The viewing decks on the 86th and 102nd floors produced $100 million in earnings last year at an extraordinary 75% profit margin. But in the first quarter, observatory traffic declined by nearly 60,000 visitors, to 428,000, and earnings fell by 7%.
Malkin said marketing of the observatory to domestic visitors would increase. New York has seen a notable drop in visitors from Canada.
Investors shrugged off the decline in observatory traffic, perhaps because they’d been expecting worse. Heading into April 30, shares in Empire State Realty had lost a third of their value this year, but rose by more than 2% on Wednesday.
“Lackluster” was the word used by BMO Capital Markets analyst John Kim to describe Empire State Realty’s quarterly results.
“But relative to market expectations, it was almost outstanding,” he said in a client note.
Empire State officials noted their Manhattan office portfolio is 93% leased, and no negotiations for space have been put on hold in the last 60 days. Since April 1, the company bought back $2.1 million shares at an average price of $6.92 each. For the quarter, core funds from operations fell to $52 million from nearly $57 million in the prior-year period.
