Ongoing hotel development is bringing more rooms to Gotham — and rates are holding steady despite the influx.
“We are still going through a supply indigestion, as New York has suffered from oversupply and Airbnb as well as a big increase in the supply of rooms per night,” says Gilda Perez-Alvarado of JLL’s hospitality group. “However, New York continues to break visitation records, so the rooms are being absorbed.”
But since many of the new hotel rooms, especially in the outer boroughs and those found midblock in Manhattan, are in the mid-market and economy levels, their lower rates bring the nightly averages down, she explains.
According to NYC & Company, the city’s official tourism office, 2019 saw a record 66.9 million visitors from both home and abroad.
By the end of 2021, the city will have more than 144,000 rooms available to visitors — and 3,900 of these will have come from the 20 new hotels that opened in 2019.
More are on the horizon: Hotels in the construction pipeline include 56 in Manhattan, 21 in Brooklyn, 37 in Queens, eight in the Bronx and one in Staten Island.
While lower rates are good news for tourists and business travelers, those who own hotels are working hard to increase incomes and bring the rooms into the 21st century with updates and tech.
“Hotels now have a focus on tech and making sure they have the hi-speed Wi-Fi and dependability of service,” says Mark Owens, who specializes in hotel investment sales at CBRE.
Mobile phone check-in and QR code keys are just a few of the updates that hotels are installing.
Iconic hotels are also rethinking how their legacies fit into the needs of a new era. The Waldorf Astoria will now have 375 hotel rooms and another 375 condominiums after an ongoing top-to-bottom renovation courtesy of its Chinese ownership. “It’s now an even split with the condos,” says Owens. “Half of them are now going into the the hotel bucket.”
Next to Grand Central Terminal is the Grand Hyatt, President Trump’s first Manhattan development. It is soon to be completely torn down and rebuilt taller, slimmer and with the latest in high-tech advances by a new ownership group that includes TF Cornerstone and Michael Dell’s investment vehicle.
New hotel projects are also popping up on the West Side near buzzy Hudson Yards. One of the newest hotels is the 212-room Equinox at 35 Hudson Yards, below glamorous residential apartments. The hotel and retail portion of the 212-room Equinox is being marketed through Perez-Alvarado and her JLL colleague Jeffrey Davis.
“The Equinox is beautiful and part of the Hudson Yards,” says Owens.
Another upcoming area hotel is the 164-room Pendry Manhattan West while the Courtyard by Marriott Midtown West, opposite Hudson Yards, opened in November 2019.
The 445-room Hard Rock at 151 W. 48th St. and Margaritaville at 560 Seventh Ave. at W. 40th St. with 238 rooms will soon be rocking out in Times Square joining the new Times Square Edition, which has spectacular lounge areas.
A cluster of new hotels is going up between Fifth Ave. and Broadway around W. 28th and 30th Streets. These include the 460-room Virgin Hotel at 1225 Broadway and a new 250-room Ritz Carlton at 1185 Broadway. The Fifth Avenue Hotel, anchored in a historic building at 250 Fifth Avenue, will also have a new tower. These will join the Breslin, the Ace and the NoMad to serve the NoMad area which also has the Gansevoort Park Ave. and the Royalton Park Ave.
“It’s phenomenal to see how the Ace and NoMad hotel reinvigorated that submarket as a destination and now a hub of luxury,” said Owens.
The Meatmarket and Chelsea are also attracting see-and-be-seen hotels. These include the luxurious Six Senses New York at 76 Eleventh Ave. in the XI project; while the Restoration Hardware Hotel at 55 Gansevoort St. will have a mere 14 rooms.
In Midtown, another glam hotel is the Aman, being developed in the Crown Building at 730 Fifth Ave. at W. 57th Street.
The 512-room TWA Hotel at JFK airport in Queens, a restoration and expansion of the landmarked Eero Saarinen terminal building, includes the cool Connie lounge inside a former Constellation airliner.
But the City is sorely lacking in convention headquarters-type hotels. Plans to construct one opposite the Javits Center has never congealed.
“From a convention destination we are missing that cylinder of the engine but from an occupancy perspective New York is still doing well,” says Owens.
“Even mid-sized groups could benefit from having a headquarters-style hotel.” But he notes that giant ballrooms and other conference-necessary event spaces don’t add to the bottom line, as hotel income is primarily made on room rates.
Few hotels have traded, among them the 729-room Parker, most recently known as Le Meridian, on W. 56th St. It sold for $420 million in January 2019 and is now being rebranded as a Thompson with fewer rooms and new condos.
But buyers from abroad are still interested in the City because putting foreign capital into dollars can mitigate risk in their home countries, Owens explains.
“New York City will continue to keep its place as one of the world’s most prominent tourist destinations,” says Perez-Alvarado. The recent lower numbers of international tourists is because the dollar is very strong and is not political, she believes.
“When investors are looking they look at our record-high occupancy levels, the better infrastructure, plus there is a huge growing middle class in China and India that can travel and the City continues to be one of the most liquid investment markets in the world.”