Monthly Archives: October 2012

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“A Building Boom in New York Hotel Rooms”

In 2011, developers added 4,404 new hotel rooms to the city’s existing 74,025 rooms, an annual increase of 5.9 percent and the highest on record, according to Smith Travel Research and the commercial real estate brokerage Cushman & Wakefield.

Supply is projected to increase by 3.5 percent in 2012 and 4.1 percent in 2013. From 2005 to 2010, hotel room supply grew by 16.2 percent, for an average of only 3.24 percent annually.

New hotels range from high-end boutiques in Greenwich Village and Chelsea to budget chains in less fashionable parts of Brooklyn and Queens. In addition to the new rooms, large existing hotels have undergone major renovations, including the former New York Helmsley Hotel which reopened earlier this month as the Westin Grand Central after a $75 million overhaul.

The hotel building boom has been buoyed by occupancy rates and revenues that have rebounded close to prerecession levels. Tourists and business travelers have filled up the new rooms, despite the European debt crisis and economic slowdown in Asia. The citywide occupancy rate fell to 77 percent in 2009 after the financial crisis, but it has rebounded to more than 80 percent in each of the last three years.

“Occupancy really has not dropped off through all this increase,” said Thomas P. McConnell, executive managing director of Cushman & Wakefield’s hotel transactions group.

Last year, tourism increased by 3.5 percent to a record 50.5 million visitors, according to NYC and Company, the city’s official tourism group. In fact, New York is the strongest of the largest 25 United States markets by occupancy, according to Smith Travel Research.

Total revenue also rebounded to $7.21 billion in 2011, after plunging 22.6 percent to $5.48 billion in 2009, according to Smith Travel Research.

“A lot of Fortune 1,000 companies have unspent capital. The easy way to deploy it is to put it into travel and training,” said Jan D. Freitag, executive vice president of Smith Travel Research. “It seems that there’s this unalienable right to travel.”

The strong fundamentals have encouraged new hotels in virtually every Manhattan neighborhood, with developers fighting to differentiate themselves through design, marketing or location.

One of the most popular new hotel types is the small, high-end boutique, like the 113-room Jade Hotel, which will open on West 13th Street in Greenwich Village at the end of October.

The Jade’s developer, William T. Obeid, president and chief executive of Gemini Real Estate Advisors, could have built a rental building on the site, but he saw continued strength in tourism and a lack of hotels in the area.

“I saw the fundamentals of the hospitality business begin to change in March 2010. We knew we had to reignite 13th Street,” said Mr. Obeid, whose company manages six other hotels in Manhattan. “New York remains one of the most traveled destinations in the world.”

Andres Escobar designed the Jade’s interiors and said that Mr. Obeid “wanted to blend into the Village,” which is why Mr. Escobar used materials like Macassar ebony wood and marble to evoke an old world style. The Jade also has a restaurant operated by Frederick Lesort called Grapevine, an homage to the Village’s 19th century speakeasy of the same name. Nightly room rates begin at $400.

“I think for the long term, New York is a great hotel market,” said Mr. Zobler of the Sydell Group. “Generally, it’s very hard to be a developer and not be optimistic.”