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Supply of New York City hotel rooms won't thin out anytime soon, with thousands of rooms to open this year alone.
Following years of increasing supply, about 9,000 new rooms in 53 hotels are expected to open in the city this year, The Wall Street Journal reports, citing data from research firm Lodging Econometrics.
It comes after the city added 41,000 rooms in the decade before the pandemic, driving up the city’s room count by almost 50%. In the third quarter of last year, there were a total of 130 new hotels in the pipeline. The supply flood is set against a backdrop of enormous challenges for the city’s hotel industry.
“We’re not deterred,” said Triumph Hotels Chief Operating Officer Brett Blass, whose company operates six Manhattan hotels and is open to adding more. “We believe in New York.”
The city is contending with a serious dip in tourism. Travel restrictions, which prevented visitors from several countries in the United States, lifted in November. Many hoped the city’s reopening would bring more travelers to the city, but the omicron variant has dampened activity, with several restaurants and Broadway shows closing down amid outbreaks and staffing issues. NYC & Co. has predicted tourism numbers won't return to their pre-crisis level until 2025.
Recently, the extended subpar performance has started to lead to more Manhattan hotel owners selling their properties at a loss. In December, RLJ Lodging Trust sold the Midtown DoubleTree at 569 Lexington Ave. to Hawkins Way Capital for $146M, less than half of what the REIT paid for the property in 2010.
Earlier this month, a majority stake in the Columbus Circle Mandarin Oriental sold for $98M, well below its pre-pandemic valuations, and the Empire Hotel on West 63rd Street saw its valuation slashed to $137M, down from $393M in 2012, according to CMBS tracking firm Trepp. Last year, a special servicer sold the ground lease of the 334-room hotel at 234 West 48th St. — once valued at $126M — for $4M.
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