March hotel occupancy in Manhattan reached 85 percent, its highest level since 1969, and meeting space availability is diminishing as demand from corporations grows.
Reasons for the meeting-space squeeze include not only a resurgence in business travel but also the conversion of several hotels to condominiums, which limited the number of available meeting and guest rooms, according to principals with Robert P. Schron Associates. "While the Plaza is most visible
(BTNonline, April 15), they also closed the Regent at Wall Street, and Trump converted the Delmonico hotel into condos," said Michael Schron, vice president of the New York-based firm. The Regent Wall St. Hotel closed in January 2004, the Hotel Delmonico in 2002.
Consequently, many corporate meeting buyers find negotiations for meeting space to be difficult at best.
Independent meeting planner John McConahy of Imagination Plus said it's always been difficult to negotiate deals in New York because it's centralized. "If you're not in Chicago, you're in New York, so they [the hotels] don't have to negotiate at all," he said.
Yet, within this seller's market, some items still are negotiable. "Everything is negotiable," McConahy said, "it just depends on how flexible the client is both internally and externally. For example, can we do a Friday-Saturday-Sunday [meeting] instead of a Wednesday-Thursday-Friday?"
Anthony Napoli, president and CEO of Briggs Red Carpet Associates, agreed. "The hotel is in the driver's seat right now, but in terms of negotiation there are times when the hotel wants to fill up, so they're flexible and you can get some good deals."
Edward Pinchard, sales and marketing director for the Barclay in New York, said "obviously, the increase in demand has led to us being in a stronger position as a supplier than a year ago, and of course more so than two years ago."
Pinchard said food and beverage pricing still is negotiable, but "room rental is definitely becoming more difficult for clients to negotiate." He said, though, that "these things are cyclical—1999, 2000 and 2001 were really strong years in New York. These cycles build themselves up, and then something happens that is economically or, this time, politically driven, so people have seen it before. They understand that the economy is back and their costs are going to rise."
Napoli said, "in terms of international business, it has not had the big return that I would have expected. There is a lot of transient return, but not so much corporate-wise." He blamed this on everything from a weak dollar to the risk of terrorism. "Everyone in the world [knows there's a] terror risk, but they know they can always drive home."
According to data culled by Smith Travel Research, year-to-date figures for 2005 show that from January through April, New York is at 79.2 percent occupancy versus 75.3 percent last year and average daily rate is $181.67 for 2005 versus $165.14 last year. Although other cities also are experiencing increases—Atlanta ADR, for example, is $78.39 versus $76.52 last year and Chicago ADR is $96.74 versus $93.67 last year—nowhere is the seller's market more visible than in New York.
A hot town has its drawbacks, and it can be difficult to find a venue in New York for corporations trying to accommodate greater than 2,000 people, unless you consider the Jacob K. Javits Convention Center on 11th Ave. The Waldorf-Astoria, Marriott and Hilton have generous space, but it's hardly enough.
"We have a lot of requests for meetings for 2,000 and we don't have space," Napoli said. "Javits is booked for five years, and these meetings used to be planned more in advance than they are now. We have plenty of hotel space, but meeting space is at a premium."
Robert Schron, chairman of Schron Associates, said sometimes a New York City hotel can up the price at the last minute.
"We had an agreement with a major property—it's close to five stars—and a contract in place at $295 a night, on peak days too," he said. "Four or five months later, the hotel decided they could raise the rate 25 percent and opted out."