Boutique, Midprice Hotels Spread

While very few large, full-service hotels are under development in Manhattan these days, small hotels are cropping up everywhere from the Financial District to Harlem. The newcomers are almost equally divided between midprice properties flagged with brand names more typically found in suburban locations and boutique hotels with distinctive urban styles.

No matter what their brand and style, small hotels, which often are converted from existing buildings, are far easier to build in a space-challenged city where building sites are at a premium. "On some blocks, you might have a parking lot that is too small for an office tower or residential building, but is just large enough for a 90- to 100-room hotel," said hospitality industry consultant Sean Hennessey, president of New York-based Lodging Investment Advisors.

Among brands new to the city are Courtyard by Marriott, Hilton Garden Inn, Four Points by Sheraton, Holiday Inn Express, Comfort Inn and Wingate Inn. At the same time, new boutique properties are as varied as the 16-room Blue Moon Hotel—converted from a Lower East Side tenement—and the high-end 235-room Hotel La Mela opening near Times Square this fall.

Overall, New York City is expected to add 5,000 new or renovated hotel rooms to its current inventory of over 70,000 rooms by end of 2007, according to figures from NYC & Co., the convention and visitors bureau. However, even this new infusion is expected to have little impact on the city's sky-high occupancy rates and average daily room rate, which reached 85 percent and $243 during 2005.

"There are so many nights, especially Monday through Thursday, when the city is sold out and people are turned away," consultant Hennessey said. "If there is any lowering of occupancy rates, it will be because of an economic slowdown, not because of these new hotels."

However, Hennessey said many new small hotels, particularly those in the brand-name, midprice category, will provide a reasonable cost alternative to traditional full-service hotels, where rates easily can climb to $300 or more. Despite the fact that these hotels tend to be far more costly than their counterparts in the suburbs, he sees a strong market for them.

"Customers have shown a willingness to pay top dollar to stay at a familiar brand in New York City," Hennessey said. "If they are Super 8 customers accustomed to paying $45 a night in another city, they will pay $200 for a Super 8 in Manhattan. Partly this is due to the popularity of loyalty programs. This extends the opportunities people have for participating in their frequent guest programs while staying in New York."

In particular, Hennessey sees these new brand-name hotels as having strong appeal to the mid-level corporate traveler. "The senior-level executive is still going to stay at the traditional hotel," he said, "but for others, the midprice hotels are a clean and attractive alternative. Guests know what they are going to get."

Not surprisingly, hotel companies with midprice brands are eager to get a share of the robust Manhattan market. Holiday Inn Express opened its first property, the 125-room Holiday Inn Express Midtown-5th Avenue, last October. A second Holiday Inn Express in Manhattan, this one a 188-room property on West 29th St., is scheduled to open this fall.

According to Verchele Mills, vice president of brand management for Holiday In Express, the new hotels are part of the company's plan to expand into urban centers. "As business travelers become more accustomed to the value and service provided by our hotels, the demand for branded, mid-tier hotels in urban markets has increased," Mills said.

Courtyard by Marriott, which debuted the Courtyard by Marriott Manhattan/Fifth Avenue in January 2005, is another brand expanding in New York. The 210-room Courtyard by Marriott New York Manhattan/Upper East Side opens this month on East 92nd St. near First Avenue. A second property, the 204-room Courtyard by Marriott Harlem, is scheduled to open on 125th St. at Park Ave. this fall.

Also increasing its presence in Manhattan is Four Points by Sheraton, which will open its second property there this summer. The 150-room Four Points by Sheraton Soho Village will be located on Charlton Street and feature an in "industrial chic" architectural style, incorporating steel beams and a glass canopy fronting the 20-story structure. A 250-room Four Points, that will share a rooftop restaurant with an adjoining 250-room Fairfield Inn, is scheduled to open next year on 8th Ave. at 40th St.

Other midprice brands new to Manhattan include Residence Inn, which opened a 357-room Midtown hotel last December, and Hampton Inn, which opened a 65-room property in the Financial District also in December. Also new last year were the 369-room Hilton Garden Inn Times Square and the 300-room Hampton Inn Times Square North.

Opening at a brisk pace, boutique hotels are finding a ready market in Manhattan as well. "Boutique hotels have proved very popular, to the extent that consumers are often willing to pay a rate that is 10 to 15 percent above hotels of similar size," Hennessey said. "The design element makes the difference. They aren't for everyone, but many people seek them out."

Felipe Klawtau, director of sales and marketing for the Hotel La Mela, said that the boutique hotel, which is under construction on West 44th St., expects business travelers to comprise the majority of guests when it opens in the third quarter of this year. "The boutique hotel has really caught on in New York," he said. "Some travelers don't want to deal with large hotels—they like the personal services and attention."

Operated by Miami-based Tecton Hospitality Group, La Mela will enable guests to register online and request room amenity preferences. Guest rooms at the contemporary-style hotel will include flat-screen TVs, dedicated phone lines, cordless phones and connections for MP3 players.

Scheduled to open this month, the 88-room Rockefeller Center Hotel occupies the first the first six floors of a new 25-story building on Rockefeller Plaza. Accommodations, which start at an introductory rate of $225, range from standard rooms to two-room suites with kitchenettes and feature luxury bedding, flat-screen televisions and ergonomic work stations. For a nominal fee, guests can purchase temporary membership in the seventh-floor Terrace Club at Rockefeller Plaza, an executive club with workstations, conference rooms, restaurant service and a terrace overlooking the Rockefeller Center skating rink.

Along with new development, several existing small hotels are being completely made over with extensive renovations. Among them is the 186-room Gramercy Park Hotel, which will reopen in July as the latest property in developer Ian Schrager's portfolio of high-end hotels. While few details have been announced, the property will include a fine-dining restaurant and private residences.

A 22-month renovation has just been completed at The Shoreham, a 174-room property on West 55th St. under new ownership. The hotel features a new restaurant, refurbished guest rooms, in-room spa treatments and penthouse suites available for special events or small meetings. The Shoreham's sister property, the 126-room Mansfield is undergoing a property-wide renovation scheduled for completion by the end of the year. Built in 1904, the midtown hotel will feature a restored Beaux Arts-style Clubroom with a marble fireplace, game tables, reading areas and a complimentary coffee bar.