Several major and midprice hotel brands will unveil a number of new properties in New York City in the coming months, even as they plan additional properties for the years ahead. The additional guest rooms and meeting space, developed either by hotel companies themselves or by private developers, will mean more choices and greater options for corporate travel and meeting buyers in a time when limited supply has helped to create the strongest hotel seller's market in the United States.
According to NYC & Company, the city's official tourism, marketing and events organization, New York's guest room inventory currently stands at 72,150, a figure that is expected to rise by nearly 20 percent in the next three years.
"About 3,500 new hotel rooms are expected to come online across New York City by year-end, while more than 13,000 newly built and renovated rooms will be added to hotel inventory by 2010," said Christopher Heywood, NYC & Company's director of international and domestic travel and tourism public relations. "New development focuses on midprice boutique, midsize and smaller hotels, while luxury property renovations and expansions will increase the current inventory to 85,000 over the period."
Such midprice brands as Comfort Inn, Four Points, Hampton Inn, Hilton Garden Inn, Holiday Inn Express, Wingate Inn and Wyndham Garden Inn are either creating or expanding their presence in all five boroughs of New York City.
While supply figures seem to change almost daily because of new project announcements, the hotels that do come into New York will help to ease the city's room crunch and bring a reality check on occupancy, said Cheryl Boyer, president of Manhattan-based hospitality consulting firm Lodging Advisors.
"In the last couple of years, hotel occupancies have been running above the long-term average for the city due to very strong demand across all segments. At the same time, we've experienced low levels of new hotel supply additions coupled with a number of hotels that were converted to residential condominiums," Boyer said. "The additional supply shows the need for more hotel rooms and will result in occupancy levels that are somewhat lower than we are running today, but that are more in line with the city's long-term averages."
The majority of new midtown hotels will be select-service, while new downtown hotels will be full-service, giving corporate planners more options, Boyer said. "The full-service hotels of Lower Manhattan are part of the redevelopment of downtown and show a recommitment to that part of New York and the city as a whole, plus demonstrate a desire to keep corporations that use the properties for meetings and other functions happy and in place downtown."
However, the new properties shouldn't be expected to reverse New York's seller's market, but they should slow room-rate growth and offer occasional opportunities to meeting buyers, Lodging Advisors' Boyer said.
"We're not expecting to see a major shift on the room-rate side, but we do think the rate of growth of room rates will moderate from the current double-digit levels over the next several years," said Boyer. "As a new hotel ramps up, there may some advantage to the meeting and travel planner in negotiating favorable rates."
Maria Chevalier, vice president for global business intelligence for Advito, the consulting division of BCD Travel, said the new supply is "just a trickle," and added buyers must tread carefully in New York's seller's market.
"In all high-demand markets, including New York, which has been one of the more challenging because of lagging supply and soaring demand, with occupancies in the 90s, corporate buyers have to be aware of availability, value and price," Chevalier said. "Will they be able to block the space they need, when they need it, at the right price? Buyers have to very carefully evaluate the situation to determine if it makes sense to be there. Some groups must be in New York absolutely for a variety of reasons, but others don't. Overall, in a supplier's market such as New York's, limited inventory may mean that a particular group is unattractive to a certain hotel, evidenced by an increasing number of no bids."
Another factor that impinges on hotel supply, she noted, is New York's additional appeal to foreign visitors due favorable currency exchange rates in the United States.
When new supply arrives in New York, it will not be limited to midprice brands. Upscale and luxury hoteliers have plans for the Big Apple as well. From Hyatt will come a new hotel in the former downtown headquarters building of JP Morgan Chase at 75 Wall St. in Lower Manhattan. It is slated to be completed in 2008. The 42-story brick tower, the only freestanding building on Wall Street, offers 360-degree views and will house luxury condominiums on the upper 24 floors and 250 hotel suites in the lower portion of the building.
It will be the largest residential and multi-use project south of Canal St. and will be managed by Hyatt Corp. under its newly launched luxury lifestyle brand Andaz
(BTN, April 23). The hotel portion will be full-service and offer a line of business amenities, from guest room workstations to a 24/7 business center.
Starwood Hotels & Resorts Worldwide will bring its W brand downtown when the W New York-Downtown Hotel & Residences opens in 2008. The 57-story building, which will feature 217 guest rooms and 222 residential units, is being built by The Moinian Group, one block from Ground Zero and the under-construction Freedom Tower. The luxury project marks the arrival of the W brand, which debuted in 1998, in New York's downtown area. It will be the sixth W in New York City.
Among Marriott's newest New York hotels will be a 154-room Fairfield Inn in Long Island City, Queens. The 12-story, $30 million project now is under construction and expected to open by the end of 2007. The hotel will be owned and managed by the Manhattan-based franchised hotel owner, developer and operator The Lam Group.
The Fairfield Inn's audience, said Kathleen Duffy, director of public relations for New York City Marriott Hotels, will be "expanded business growth in the area, including the expansion of Silvercup Studios, an established film studio in space once occupied by Silvercup Bread Co."
Another new Fairfield Inn will be the 86-room hotel expected to be completed in December 2007 at Astoria Blvd. and 45th St. in Queens. "The hotel will cater to airport business, as well as additional local corporate business from companies that include Bulova," Duffy said.
The Lam Group has a number of other hotels either under construction or in the planning stage. Those under construction include two side-by-side hotels in downtown Brooklyn. The first is a 320-room Sheraton; the other a 180-room Aloft Hotel, the city's first such property. Both hotels should be completed by fall 2008.
"Brooklyn is one of the city's hottest neighborhoods right now," Duffy said, "and is no longer second choice when it comes to hosting large meetings and groups. Additional rooms in Brooklyn will allow it to welcome meetings and groups while still accommodating the individual traveler." The New York Marriott at Brooklyn Bridge completed a renovation last year.
Other hotels under construction by The Lam Group are a Fairfield Inn by Marriott Times Square, a 152-room Four Points by Sheraton SoHo Village to open in the first quarter of 2007 and a Four Points by Sheraton Times Square.
Planned Lam hotels include the 360-room Manhattan Hotel, a full-service property in Midtown West, coming in the third quarter of 2008; the 650-room, full-service Gold Hotel Plaza in the Financial District, scheduled for the first quarter of 2009; and a 66-story, 1,000-room hotel that will be connected to the Javits Convention Center in New York's Hudson Yards district. This hotel, with 50,000 square feet of function space and set to open in 2010, is considered a key aspect of the Javits' 520,000-sq.-ft. expansion.