Downtown N.Y. Hotels Regroup, Assess Climate, Future
The Ritz-Carlton Hotel Co. late last month announced that the opening of its deluxe 298-room property in downtown New York's Battery Park City had been rescheduled from Oct. 9 to Feb. 1, 2002. Delayed in the aftermath of September's terrorist attacks on the nearby World Trade Center, the announcement of a new opening date was a bright spot in an otherwise radically reshaped lodging market in downtown New York.
Since Sept. 11, the diverse hotel community in the downtown financial district has had to regroup, assess the new competitive realities and begin the process of moving forward. Among the hotel companies directly affected by Sept. 11 were Marriott International and Hilton Hotels Corp., which owned or managed properties in the immediate vicinity of the attack. Carlson Hospitality Worldwide and Six Continents Hotels & Resorts, meanwhile, operated hotels outside the immediate area, properties that didn't incur physical damage and continued in operation.
At the same time, the events of Sept. 11 created such a severe disruption to the normal course of business in the financial district that a large number of companies were displaced from their offices and forced to seek temporary space in other parts of the city and greater metropolitan area. A total of 30 million square feet of office space was lost or damaged in the attack. Some of these companies said they will return to the financial district; others already have committed to relocating permanently to New Jersey, Connecticut or elsewhere in the metropolitan area. Consequently, business travel patterns—and lodging needs—throughout the New York City area have been unexpectedly reconfigured to some degree (see story, page 20).
For buyers whose hotel programs include bringing many room nights to the financial district, the past two months have been filled with uncertainty. Because business travel only slowly is returning to somewhat normal levels, there hasn't been the demand for room nights that there otherwise would have been. Once demand increases, however, buyers may have to scramble to make up for hotel rooms that were lost in the attacks, either permanently or for an extended period. Or travel buyers may need to supplement their programs with room nights in other parts of the city or metropolitan area close to where companies have resettled and where their travelers' business now takes them.
The Sept. 11 upheaval came in the midst of what already was a difficult year for New York hotels. As a result of the weakening national economy, occupancies and room revenues in New York have been depressed since February, compared with 2000, which actually was a banner year for the industry. Many buyers were looking at significantly reduced travel budgets even before Sept. 11 and, therefore, were booking fewer room nights in New York. In August, for example, occupancies in New York were down 10.1 percent over the prior year.
The 817-room Marriott World Trade Center Hotel, which was located in the Trade Center complex, was destroyed by the attacks. On Sept. 10, 940 guests were registered there and all were evacuated safely by the time the first tower collapsed the next morning.
The 504-room Marriott Financial Center Hotel, the 561-room Hilton Millenium Hotel and the 463-suite Embassy Suites Hotel in Battery Park City, another Hilton Hotels Corp. property, sustained damage, but are expected to reopen. None of the three, however, have specified yet when those reopenings will be.
"It's unclear when we're going to be allowed back into the building, but there's no question we're going to be part of the rebuilding of downtown," said Emily Pazzaglini, director of sales and marketing for the Embassy Suites, which opened in April 2000 and is the largest Embassy Suites in the chain. Pazzaglini noted that accessibility to the Battery Park City site had been an issue because of both the initial damage from the attacks and the subsequent rescue efforts.
The message that The Regent Wall Street, which is part of Carlson Hospitality, wants to communicate is that, psychologically, the events of Sept. 11 are behind it and it's moving forward. "We're seeing five times the number of reservations we saw immediately after the attacks," said Rose Genovese, director of sales and marketing at the 144-room deluxe hotel, which never closed during the emergency. "Some of the guests we're seeing, such as insurance company representatives, are here related to the crisis, but otherwise it's senior-level business travelers no different than we've always seen."
Similarly, at the 138-room Holiday Inn Wall Street District, which is part of Six Continents, bookings recently have improved. "We're feeling a certain optimism, which is good, though there's the sense we're playing with a whole new set of rules outlined in a book we don't yet have," said Richard Yaeger, director of sales and marketing. While the hotel didn't suffer any structural damage, it closed for a week after the attack until electricity was restored. Yaeger said it might take up to six months for business to be fully restored to pre-Sept. 11 levels.
Genovese said she could empathize with travelers who were returning to the area for the first time since the attacks and might feel a sense of trepidation. "Because of this, staff members, particularly our concierges, are working especially hard to provide guests with up-to-the-minute information to assure them that things like taxis and limousines are now functioning quite normally in this part of downtown," she said. Due to these concerns, the hotel also is providing airport pickup for guests. Furthermore, all of the hotel's traditional service standards have remained in place.
As business has started to return, there's been no sense of competitiveness, according to Yaeger. "That's been really heartening," he said. "From both downtown and midtown, we haven't felt we have competitors, only colleagues." Corporate buyers have been supportive as well, he added.
At the Ritz-Carlton, meanwhile, the hotel itself will occupy the lower 14 stories of a 39-story building. Given its location at the tip of Battery Park City, the building has unimpeded views of the harbor and Statue of Liberty, in addition to its easy access to the financial district.
"We're calling our traditional high-level of service 'relevant luxury,' " said Manfred Timmel, general manager. "This is an acknowledgement that many of our guests are senior-level business travelers from both the United States and abroad whose hectic schedules entail a fair amount of stress. Services we're providing, such as the bath butler, are meant to address this and, therefore, allow them to function more productively."
The upper 25-stories of the Ritz-Carlton building are being sold as condominium apartments. In fact, the project will be the first multi-use development of this kind to open in New York. In effect, the Ritz-Carlton functions as a brand to attract apartment buyers interested in the level of service they associate with the Ritz name. "Residents will have access to a whole range of hotel services, including room service and restaurant signing privileges," Timmel said.