New York's Strong Lodging Demand Extends To Airport Properties
Greater demand by individual corporate travelers and increased booking interest by corporate groups for hotel meeting space at New York's three major airports—JFK, LaGuardia and Newark Liberty—are on the upswing, industry experts said.
"In recent years, there has been a noticeable rebound in strength in New York City and Manhattan hotels, but that strength wasn't moving out to suburban and airport hotels as rapidly. Now it is. While corporate demand is still strong in New York, market dynamics are shifting somewhat, as space in the city gets harder to find," said Sean Hennessey, president of New York-based Lodging Investment Advisors. "With that being the case, growing numbers of corporate individual travelers and groups are headed to airport hotels, giving those hotels a boost in occupancy. Because of their improved business, hotels now have an edge over corporate groups, with considerably more negotiating power overall than they've had for some time."
While room rates will go up at airport hotels because of their gains, Hennessey said, their rates would be still about $75 less per night than at hotels in Manhattan. "Of New York's three airport markets, the LaGuardia market has performed the best. That's partly psychological, because if business travelers can't get a room in the city, they will choose LaGuardia first over JFK and Newark because it's closest to the city, thinking incorrectly the other two are too far away," he said.
New York's recovery and higher hotel occupancies began in the third quarter of 2003, Hennessey noted. By the end of 2005, the recovery for the city's hotels reached its zenith, he said, meaning occupancies had flattened out because of harder-to-find rooms. That's when the move to airport properties began, including a bookings gain in the Sunday-to-Thursday period.
At the 478-room Ramada Plaza Hotel - JFK, director of sales and marketing Robert Santucci admitted life is good these days. "Both demand by business travelers and corporate groups is on the increase. A key factor for that is that hotel occupancies in Manhattan are tighter, with city room rates up $25 this April over last year," he said. "As a result, our hotel and the airport market in general is anywhere from 30 to 60 percent lower than Manhattan hotels and occupancies are up," he added.
Corporate groups are using the hotel more for two-day meetings and doing so more often Sunday through Thursday, Santucci said. "Weekends have been strong traditionally at airport hotels, but lately we've seen an increase in mid-week bookings. Overall, the small meeting market is up for us over last year," he said.
Donna Corallo, director of sales and marketing for the 386-room Radisson Hotel JFK International Airport, which will become a Doubletree on June 28, said she is seeing very strong individual and corporate meeting business.
"Even with additional small boutique hotels and more condos in the city, there are still fewer hotel rooms in the NYC market," Corallo said. "This compression, in conjunction with resulting high room rates, is creating demand for hotels in the surrounding boroughs and also at airport hotels. The price at airport hotels is less than Manhattan but still competitive—$359 and more in the city compared with about $189 to $229 at the airport. The negotiating climate is better for us, too, since we're getting increased demand from the corporate market, which for us is a mix of national, regional and local groups. Demand is up and that is driving a higher rate so, in general, we have greater negotiating power than we've had in the recent past."
Meanwhile, at the 435-room New York LaGuardia Airport Marriott, director of sales and marketing Justine Florian said that the negotiating climate is stronger for the hotel than it was at this time last year.
"It is good for our solid base of customers—mostly regional and local, with some national groups—and good for us with more midweek business this year. We try to be as flexible as possible with our customers and try to come up with reasonable fair market value for them. The current negotiating situation does favor the hotel, but it's really not about a power play on our part," she said.
In New Jersey, at the 591-room Newark Liberty International Airport Marriott, director of sales and marketing Pat Strocchia confirmed that, "because the New York hotel market has become compressed, transient travel has been up considerably from April 2006 on," while the negotiating climate "is still about 50/50, with neither the hotel nor corporate groups holding all the cards. We're still negotiating back and forth, and prices have gone up, but we're not seeing increases on the catering side."