Luxury Rears Its Head With Hotels In Unlikely Manhattan Locations

Only a short cab ride away from the Ritz-Carlton, in the affluent Central Park South area of New York City, sits another full-service, luxury property. Yet, while the Ritz-Carlton calls Bergdorf Goodman and Tiffany its neighbors, the Hotel on Rivington abuts gritty drinking holes and dilapidated walk-up apartments, whose exteriors look as if they haven't been refurbished since the turn of the century—the perfect location for a deluxe property, according to hotel management.

The two-year-old, 110-room Hotel on Rivington in Manhattan's Lower East Side, an area undergoing revitalization helped, in part, by the hotel's arrival, is just one of a handful of posh, uber-luxury hotels, which have sprouted in some of New York's more unchartered locales, and targeting a younger business traveler.

The Hotel on Rivington, the Hotel Gansevoort in the Meatpacking District, the Maritime Hotel in Chelsea, 60 Thompson in SoHo and the newly renovated Gramercy Park Hotel, are some of these trendy, Manhattan hotels catering to creative, younger business types—musicians, fashion moguls, advertisers, techies—and their locations help to fill that niche. However, as much as this new breed of business traveler yearns for idiosyncrasy, developers choose many of these new locations because existing hotels already have cornered other New York markets. "The Lower East Side is one of the only areas that hasn't been attacked by hotels before," said Klaus Ortlieb, one of the managing partners of the Hotel on Rivington and its general manager, who carries 25 years of experience in the hotel industry. "SoHo is now overhoteled." Ortlieb would know. He was responsible for opening SoHo's Mercer Hotel eight years ago.

These hotels are part of a larger movement by hoteliers to tap otherwise unused areas, said Sean Hennessey, president of New York-based Lodging Investment Advisors. "Hotels like the Rivington are part of a larger trend where hotels in non-traditional neighborhoods or outside of the midtown core are just as desirable for travelers, especially if they are close to nightlife and restaurants," he said.

The Hotel on Rivington's Ortlieb also relied on foresight. "Knowing how New York moves in and out through stages of where people go and knowing what the neighborhood had to offer, it made sense to put the hotel up in the area, but not a low-end property, a high-end one," Ortlieb said. While land to build on is scarce, the Hotel on Rivington's occupancy has been buoyed by inventory being taken out of many hotels in New York and replaced with condos. "Availability has helped our occupancy rate, with hotels converting," Ortlieb said. "When supply is taken out, people try new places." The hotel will close the year with an occupancy rate close to 87 percent, which is above the average New York City hotel occupancy rate, according to Smith Travel Research.

Yet, trying one of these hotels does come with a steep price tag and, often, such hotels as the Hotel on Rivington do not negotiate corporate contracts. The average daily rate for a room at the Hotel on Rivington in the fall season runs about $425, dropping $50 in the summer.

The Hotel Gansevoort, situated in the Meatpacking District, has had a renaissance of sorts, now with more high-end restaurants and clubs than the beef warehouses that gave the area its name. Rooms at the 187-room hotel start at $395, but a duplex penthouse costs $5,000. For business travelers, the hotel offers complimentary wireless Internet throughout the building, a full-service business center and 16,769 square feet of meeting space.

Without corporate agreements, some of the hotels work on tacit agreements with companies, whereby repeat customers will be given the best deal possible.

"Everyday we get calls for negotiated rates," according to the Hotel on Rivington's Ortlieb. "What we'll do with customers that book a lot is give them the minimum published rate at the time of booking and a free upgrade based on availability." Ortlieb counts The Weinstein Co., the movie production company led by the former heads of Miramax, as one of his most loyal clients.

New York's famed Gramercy Park Hotel went through a total overhaul led by hotel impresario Ian Schrager, who, while known for his minimalist, sleek touch, hired artist Julian Schnabel to transform the hotel into a regal, opulent 185-room oasis. The hotel reopened to the public in early August. Lodging Investment Advisors' Hennessey said the Gramercy Park Hotel was a perfect example of transforming a hotel that was near the end of its economic life.

"There will continue to be a healthy level of hotels redoing rooms over the next couple of years," said Hennessey. "The renovations that have been done around the town have either been for a major repositioning, like the conversion of the Regal Royal to the London New York, or it's been adding components, such as upgrading to flat-screen televisions."