NEW YORK CITY-The city’s hotel market has gone from strength to strength in 2011, reaching a record 90,000 hotel rooms by year’s end, a 24% increase since 2006, according to new data from the Bloomberg administration. By early 2012, more than 7,000 rooms are in the pipeline that will add to the city’s booming hotel inventory, with 40% of new openings taking place in the outer-boroughs, a sign that tourists and visitors are seeking options outside Manhattan.
“The demand has radiated out to the surrounding areas, and that’s the boroughs,” says Daniel H. Lesser, president & CEO of New York City-based LW Hospitality Advisors LLC. Lesser says much of the activity has taken place across the river in Long Island City, where 17 new hotels with 1,500 rooms total have opened. “Between office and residential developments, it is a very dynamic market that is really evolving,” he says. “Twenty years from now, it’s going to be a city-within-a-city.”
Currently, approximately 650 rooms are under construction in Long Island City alone. The neighborhood features a mix of major hotel brands, like the Four Points by Sheraton, Fairfield Inn and Holiday Inn, as well as independent boutique properties like Z NYC, the Ravel, the Queensboro Hotel and the Verve.
Overall, the increase in hotels across all five boroughs reflects an overall upward trend for the city’s $31 billion tourism industry, the city says. In September 2011, an estimated 323,000 people were employed in the travel and tourism sector, marking a new monthly record. With that, room rates are steadily increasing, and occupancy neared 85%, among highest in the nation.
And while the city remains far stronger than the national average in terms of hotel occupancy, Lesser says that the city remains ‘under-hoteled.’ “At the end of the day, New York is an underserved hotel market,” he says. “There aren’t enough hotel rooms in New York and that’s why the occupancies are in the mid-80s on an annual basis.” He predicts that the new rooms coming on-line will be “very quickly” absorbed. “Even at 90,000, the market will still be under-hoteled.”
Lesser says the city is still lacking a headquarters hotel or significant convention hotel near the Jacob K. Javits Center, which drives up occupancies in Midtown. “There one needed there as the Far West Side gets developed,” he says.
At the same time, many new projects are in the works to help aid the 48 million-plus tourism industry. According to the city, approximately 40 new projects are slated to open in the next 30 months, with about 13 properties representing 1,865 rooms in boroughs other than Manhattan: eight in Queens, three in Brooklyn, one in the Bronx and one on Staten Island. In Manhattan, 22 new hotels representing 4,120 rooms are also under construction, the city says.
Much of this development, Lesser says, is due to the city’s evolution into a 24/7 hospitality market. “From a hotel perspective, it is a very unique,” he says. “It is really a seven-day-a-week market, as opposed to others. A lot of urban markets are four or five day markets, but New York is really the epitome of that."
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