Finding Rooms In N.Y. Remains A Challenge

<B> Finding Rooms In N.Y. Remains A Challenge</B>

By Robert Selwitz

Despite ripples from recent Wall Street tribulations, the New York City hotel scene should stay buoyant for operators and challenging for business travelers well into 1999, said John Fox, senior vice president at PKF Consulting.

Fox said that occupancies hit 83.9 percent last year, and will hold firm at 84 percent for 1998 and1999. "Until the city gets more rooms, we won't see any change. Right now, for all practical purposes, New York City is at capacity. There are additional hotels being discussed, but they're still a couple years away from being available."

In addition, New York City's average room rate reached $212 this year and is expected to hit $227 for 1999. "This is the first time on an annual basis that a major U.S. city has broken the $200 barrier. And what is most interesting is that we only just broke the $100 barrier in 1987," he said.

When 1999 commences, hotel access will be easier and a tad cheaper. After that, with European and South American traffic somewhat compensating for dips in Asian bookings and U.S. business continuing at its current pace, "getting a mid-Manhattan room, when and where you want one, will continue to be challenging," he predicted.

"Knowledgeable hotel owners and operators still are targeting the high end of the market. We all tend to get hung up on Wall Street's numbers and, at the longest, what's happening quarterly. But hotel developments have a 20- to 30-year life span, and the appearance of the new Peninsula and W should caution us not to rely so heavily on the short-term, myopic view," he said.

One prognosticator who's not so sure hotel bookers are completely without leverage is Karen Rubin, senior vice president of HVS International in Mineola, N.Y. "We're standing on the verge of humongous uncertainty during the next couple of months. What's happening is that many lodging companies, and individual property owners and operators have started to revise their budgets downward for the coming year," in response to numerous reports indicating significant cutbacks in corporate travel next year. That, she said, "should make properties more favorably consider negotiating."

Rubin stressed that "the nervousness about future corporate earnings is based more upon apprehension than actual figures. But it is these concerns that are driving many companies to look for ways to cut discretionary spending. And one of the first places they examine is corporate travel."

Corporate buyers may be able to obtain lower rates from properties that would rather ensure business now than gamble on getting higher returns in several months. Therefore, Rubin advised corporate travel buyers who know their future travel dates for individual trips or group events to "book now and play on their fears.