N.Y. Hoteliers Remain Bullish

<B>N.Y. Hoteliers Remain Bullish</B>

By Robert Selwitz

Cautious optimism about business in the months ahead--and general confidence that, whatever the numbers, profits aren't likely to be challenged--mark attitudes among a cross section of leading New York City hotel executives.

Leading the thumbs-up crowd is Michael Stengel, general manager of the New York Marriott Marquis. Stengel wishes that last year, "we had another hotel the size of the 1,946-room Marquis. We could have filled that too. This property enjoyed 96 percent occupancy during 2000, and I'm convinced we had to turn away, or redirect requests, for a similar volume."

While Stengel doesn't expect a similar bonanza this year, "the fact remains that more often than not the city is packed, leaving a large number of people who'll gladly take a quality room almost anywhere." While noting a softening in individual business travel, he reported that leisure traffic remains strong and groups continue to flow in, "despite the fact that the Javits ranks 17th in size among the nation's city convention centers. That's smaller than Louisville or Kissimmee."

While bullish about New York City in general, Stengel is even more optimistic about the drawing power of the revitalized Times Square. Not only has the on-the-street milieu totally turned around, "but the number of corporate headquarters is drawing rising volumes of business travelers who want to be able to walk to their appointments."

Major new or rising neighborhood edifices include headquarters for both Ernst & Young and Morgan Stanley. As for the current scene, "We may lose a couple of occupancy points, but that still would keep the Marquis above 90 percent. That's still a pretty hot number," Stengel said.

Prospects don't appear so bright across the street from Tiffany's where Brian Honan, director of marketing at Four Seasons Hotel New York, said, "I've seen a definite softening. Travel to New York is off, and all those new boutique hotels are subtly making a difference. Everyone would pay attention if a 1,200- or 1,500-room property were to open, but when a collection of properties in the 75-to-125-room range debut, it's below the radar screen."

Honan also is seeing a quieting in demand from Wall Street firms, and is concerned about problems in the entertainment industry, which appears almost certain to face a strike by the Screen Writers Guild. If, as rumored, other movie unions honor strike lines, "it could be crippling not just for southern California, but the markets they regularly feed. And New York is definitely one of those markets," he said.

Honan also feels that corporate cost containment is in the air--although his clients tend to be somewhat above such strictures--particularly if any economic slowdown proves to be mild. Also on the plus side, he sees increased international traffic, particularly from Hong Kong and Japan.

Rudy Tauscher, general manager at Trump International Hotel and Tower, agreed that the Wall Street and entertainment markets are areas of key concern. "We definitely see a longer booking curve now, along with a slowdown in traffic related to the launching of IPOs. Nevertheless, we have a very good reservation base for April, and May bookings now are ahead of last March's booking pace."

Geoff Andrew, marketing director at Summit Hotels and Resorts, whose New York properties include the Kitano and Michelangelo, is "concerned about the rate of current business compared with last year. We are starting to see major corporations tighten the proverbial belt and re-implement travel policies that may have been abandoned or overlooked during the past couple of years."

Similarly cautious is Jennifer Tsonas, director of marketing at The Palace. "While last year everyone created huge budgets for 2001, New York's hotel operators are realizing that the market's decline may not be temporary," she said. "But, while occupancies are below our budgeted figures, we are still exceeding or maintaining our rate and RevPAR. People simply are not traveling as much, not just buying down.

"Companies in general are scaling back, canceling or delaying meetings. Many companies are putting as much as possible on hold, then waiting to see what happens," Tsonas added. "That probably means room buyers face greater choice and accessibility to rooms this year compared with 2000. And there still are a lot of new rooms coming onboard."

At the significantly less-expensive quintet of properties operated by Apple Core Hotels, COO Vijay Dandapani is encouraged by an increase in business traveler patronage. He credited the traffic to the fact that "we offer many of the same amenities, including onsite fitness centers, available at much more expensive competitors. Many companies are questioning whether it is really necessary for many of their travelers to spend $300 or even $500 per night when visiting New York. Of course, we also see a cutback in total business trips, particularly on those where the reasons are less than compelling."

While Dandapani's properties are surrounded by such new boutique entries as the Bryant Park, Library and the W that opened last year in Union Square, "Fortunately, they are a good deal above our price sector," he said. "Indeed, we've seen very little activity involving new properties in the moderate rate range."

Glenn Isaacs, general manager of the Empire Hotel Group, said that his moderate-price group of seven Manhattan properties is seeing more business traffic. However, "while last year we were upselling out rates by 10 percent to 15 percent, this year we've cut those same rates by 10 percent to 15 percent," he said, adding, "One critical factor is that we have lost 20 percent in the FIT market, much of that from international travelers seeking ever better deals on the Internet. Business travelers are increasingly shopping the Web on price. Therefore, 2001 will be a down year by about 3 percent in occupancy; average rates also may decline. Last year, corporate customers chased hotel rooms. This year, it's the hotels doing the chasing.