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Funding for New Hotels Dry in Manhattan; National Lodging Forecast Turns Sunny

NEW YORK CITY-New hotels opening in Manhattan will benefit from the lack of funding for hotel construction here. But investor interest in the lodging market on a national level is keen, with a recovery predicted for 2003.

By Glen Thompson | Updated on January 14, 2002

NEW YORK CITY-Funding for new hotel construction in Manhattan is virtually nonexistent, according to a lodging industry expert at Cushman and Wakefield. And while that may sound like yet another sign of a failing economy, analyst Daniel H. Lesser sees the situation as a positive indicator for the future health of the New York hotel market.

“It’s nearly impossible to find financing for new hotel construction at this point, “Lesser, a senior director with C&W’s Hospitality Industry Group tells GlobeSt.com.” And that’s a good thing.” Lesser contends that new hotels coming into the market–the Ritz Carlton New York, Battery Park opened last Monday and the W New York-Times Square held a soft opening two weeks ago–need a honeymoon period to establish themselves. “Some time needs to go by for these assets to get absorbed into the marketplace, because when the economy comes back [the local lodging industry] is going to be pretty strong.”

Lesser’s observations reflect those of real estate analysts in every major sector who say that moderate development in the late 90s prevented a repeat of the steep declines that took occurred a decade ago, when a perfect storm of overbuilding and recession decimated the industry.

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