What Hotels Are Coming?
The hoteliers at Bisnow’s Hotel Investment Summit yesterday intend to keep building like crazy in NYC (or until “they will come” stops working on a pro forma), considering the 85% occupancy rate that shows no signs of sliding.
A crowd of 350 at The Roosevelt Hotel heard Marriott North America chief development officer Eric Jacobs says his company needs Manhattan properties for foreign travelers as it creates awareness for its 18 brands via projects in other countries. Marriott has its largest pipeline ever (195,000 rooms, including 30,000 approved but not yet signed with a developer), including 12 in Manhattan, such as the Clock Tower Edition (due in early 2015), a Renaissance on 33rd Street, and another Times Square hotel it’ll announce soon. Add those to 25 it’s opened in NYC in the past five years.
We snapped Sydell Group’s Matt Livian, who says his company, which owns the NoMad, is looking for a NYC site to build a Freehand hotel (kind of like a hostel), following one in Miami and another in development in Chicago. NYC offers year-round demand from both leisure and business travelers, he says. So while it takes a hotel three years to reach peak occupancy elsewhere, NYC properties can hit those numbers immediately upon opening. Gansevoort Hotel Group’s Irina Zavina, whose firm pioneered Meatpacking with its urban resort namesake, says even as hotels proliferate, opportunities exist for hotel companies to create destinations. She names the LES, LIC, BK, TriBeCa, and Harlem (which needs to consider finding itself an acronym—or is it one: Hey, A Real Lovely Entrance to Manhattan).
Virgin Hotels' Allie Hope agrees that a lifestyle brand can induce its own demand. So while the company is looking in Times Square, it’s also checking out Brooklyn. The first Virgin Hotel, a 250-room project with six F&B outlets, will open this fall in Chicago, and its second hotel, NY’s 500-key project at 29th and Broadway, is a few years away.
Gemini Real Estate Advisors CEO Will Obeid (left), whose firm is building the Jade Bryant Park on 38th Street, also is looking near the Seaport. Starwood Hotels’ Allison Reid (right) says all nine of her company’s brands could grow in NYC. Starwood has new hotels opening next year in Midtown, FiDi, and LIC. She expects luxury and select-service to dominate ground-up hotel construction in NYC for the next few years, while full-service brands await the return of group travel.
Morgans Hotel’s Yoav Gery, whose firm has four NYC hotels, would love to add five more here. (He's pictured center, with panel moderator Marvin Antman of McGladrey and Cooper Carry’s Rob Uhrin.) McGladrey is advising a developer on a $90M hotel underway in Brooklyn, and Cooper Carry is designing three NYC hotels. While designs need to be unique and exciting in NYC, entitlements are easier here, Rob says. So what’s to stop these hotel companies from building to infinity? Competing with condo developers for dirt is hard, Eric says. Hidrock Realty’s Abie Hidary adds that retail, office, and apartments also put up a good fight for land. Irina cites the challenge of training and retaining talent as so many luxury competitors pop up. And Denihan Hospitality Group prez David Duncan says his company is even helping employees with housing to incentivize them to relocate.
LW Hospitality Advisors CEO Dan Lesser (whom we snapped with moderator Kimberly Wachen of Arent Fox) says supply has impacted room rates, but he’s not worried as long as occupancy rates stand strong, and they will for years, he says. Kimberly says NYC aims for 55 million tourists next year, and analysts predict 6% RevPAR growth nationwide this year and demand that outpaces supply.
David (left) is less sure that NY’s saturation point is so far away. CBRE Hotels’ Brad Burwell (center) did the math: The city attracted 50 million visitors three years ago and hit 54 million last year. It added 7,800 keys in the past three years and could add 4,500 in 2014. NYC would have needed 18,000 more to stay at 85% occupancy, he says. He and Abie (right) also point out that some rooms will leave the market. (Lock your doors, or the entire room may up and walk away.)