New York's Times Square Sees Hotel Scene Surge

When investment banking firm Lehman Brothers last month announced that it was moving its headquarters to a new 32-story office tower at Seventh Avenue and 49th Street, it was the latest evidence that the Times Square neighborhood on Manhattan's West Side had become a premier corporate address and, consequently, a significant destination for business travel.

The Lehman Brothers announcement was symbolic in another regard as well. In acquiring the 1 million-sq.-ft. building, the firm is relocating from the World Financial Center in Battery Park City, a site directly across from the fallen World Trade Towers . Lehman thus became the first major company to announce it permanently was leaving the downtown financial district in the wake of September's terrorist attacks.

Should other major firms follow in its footsteps, the decision would have tremendous impact on the viability of downtown Manhattan as a thriving business district and as a location for business hotels.

Times Square already was experiencing a resurgence in hotel development during the past few years, spurred by an initial wave of office projects and a government-supported redevelopment of 42nd Street that spelled the end for some of that street's more tackier aspects. Completed office projects included signature buildings for Morgan Stanley, Condé Nast and Reuters. Buildings for Andersen and Ernst & Young also are under construction.

New hotel development has kept pace. Among large, full-service hotels, the 509-room W New York Times Square is scheduled to open late next month, following the pioneering 444-room Hilton Times Square, which debuted in April 2000. The 858-room Westin New York at Times Square, meanwhile, currently is under construction with an opening projected for a year from now. Both W and Westin are part of Starwood Hotels & Resorts Worldwide. All three are high-rise towers. Yet, smaller, more intimate hotels also have found their niche in the area. The 200-room Muse, for example, opened in September 2000 fashioned out of a historic office building, while The Time, with 193 rooms, opened in mid-1999.

For buyers trying to cover their New York room night needs in the aftermath of Sept. 11, these Times Square hotels offer a viable alternative, especially if the companies that travelers are visiting now have relocated—either temporarily or permanently—to west midtown. It's premature, of course, to know with any certainty how much business that's diverted from downtown these properties eventually may see. In fact, in interviews last week, Times Square hotel executives were emphatic that the last thing they intend to do is benefit from another New York neighborhood's misfortune.

The W in Times Square will be the chain's fifth property in New York and the chain's flagship worldwide. "Opening in Times Square right now represents a huge commitment for us and a real commitment to New York," said Lisa Zandee, area director of sales and marketing. "Post-Sept. 11, communicating this kind of message—that we're here, that the opening's going forward on schedule—is more important than ever. Historically, Times Square was always an entertainment venue, but in recent years it's taken on a strong business profile, a trend that's clearly going to continue."

For a hotel, midweek business travel supplemented by strong leisure business on weekends makes for a strong marketing plan. "We're also expecting there to be a lot of crossover, with business travelers, for example, coming in early to catch some Broadway shows," Zandee said.

Unlike other W Hotels, the lobby and front desk at the new property are on the building's fourth floor, as opposed to the ground level. "What's become a signature for W, the living room and café, are also on this level," said Dan Bergmann, general manager. "Considering all the street activity in this part of town, moving the living room and café up higher will allow guests a greater sense of privacy." Those first floors will be devoted to the hotel's restaurant and bar, as well as a screening room and meeting space.

Similarly, the Hilton Times Square's lobby is above ground level. But that sense of privacy also provides guests with a feeling of security, which especially is welcome in these uncertain times, said general manager Russell Menkes. "We're receiving some business that would have gone downtown and there has been some nontraditional business as well related to the rescue efforts."

Menkes noted Times Square's prominence as a transportation hub. "We're very close to both the Port Authority and Pennsylvania Station for buses and trains, respectively—with airport connections available from each," he said, "so people are comfortable that they can get in and out of the city very easily."

Officials at both The Muse and The Time said Times Square was well on its way to seeing additional office development before the events of September. "Inevitably, buildings that were already under construction will fill up with tenants faster and we're well positioned to take advantage of that," said Mark Briskin, general manager of The Muse. "The neighborhood's already become a center for publishing and advertising, as well as the recording industry and other aspects of the entertainment business."

These industries now are being joined by financial firms, such as Lehman Brothers and law firms. "From the 'forgotten area of the city,' it's a sense of having become 'center of the world' practically overnight," Briskin said.

The Muse and The Time also offer a more low-key experience. "Our intention is to be stylish, yet warm, comfortable and residential," said Jennifer McMahon, director of sales and marketing at The Muse. "From the repeat business we're already seeing, we believe this is something business travelers are looking for. Much of the security concerns have now abated, but we still want to provide a more intimate, human-scale experience."

Looking toward the longer term, Deborah Lewis, Briskin's counterpart at The Time, said much of the available land in Manhattan left for large-scale office development is on the far west side. "You're already starting to see signs of activity on 11th and 12th avenues and we're well positioned to take advantage of that," she said.