New York City is known as the best performing hotel market in the US. That fact should not surprise anyone. The city's strong hotel performance numbers for last year have encouraged supply increases in 2011. During the past year, 37 hotels (5,638 rooms) were added to the NYC inventory.
Active Pipeline
More hotel rooms have come on scene in the Big Apple than in any other major U.S. market. New York City has the largest active pipeline in America. According to STR/McGraw-Hill Construction Dodge, New York has 173 hotels (20,650 rooms) in the active pipeline. Apparently, no slowdown is expected any time in the near future.
Increased Supply
If all plans for 2011 come to completion, New York City will see a 4.2% rise in supply for the market. Obviously, expectations point to a continued recovery. Based on STR statistics as of April 2011, the present supply is 538 hotels (99,406 rooms).
In fact, 53 projects (6,712 rooms) are in the construction phase at this time. Visitors to New York City should be prepared to see plenty of development in this global center.
Summer Openings
Specific openings for June include aloft New York Brooklyn, The NoMad Hotel, Dream Downtown, and Holiday Inn New York Midtown, as well as Yotel New York Times Square (the largest property under development - 669 rooms). The Hyatt 48 Lex and TRYP New York City Times Square South are planned to open in July.
Unique NYC Hotel
Brack Capital has purchased 185 Bowery completing a four-property parcel between 185-191 Bowery. In addition, Brack Capital's Orchard Street Hell Building will be reborn as a Hotel Indigo. Dutch hotel chain CitizenM plans a "budget luxury" hotel at the site resting on the Bowery and Delancey Street. This unique hotel will target "mobile citizens of the world" who seek "affordable luxury for the people."
This spacious hotel (315 rooms scattered across 90,000 square feet) will offer guest rooms with wall-to-wall windows, LCD flat screens, rainshowers, and oversized beds. The innovative décor features rooms controlled by a "mood pad." In other words, this new hotel will have rooms that can change colors. The project should be completed by next year.
NYC Hotel Market
Investors are not worried about the impact of increased supply. Buyers have confidence in the established and historically-sound NYC market. Andrew Labetti, GM of The Benjamin, a 209-room Manhattan hotel, is certain that the NYC market can handle the new supply.
As well, Host Hotels president and CEO, Ed Walter, has expressed optimism about the remainder of the year in the NYC hotel industry. Host Hotels is involved heavily in construction and renovations during the first half of 2011. Yet the company expects huge returns later in the year. Host is in the midst of repositioning the Sheraton New York Hotel & Towers.
Gaining Momentum
Positive demand is evident in the NYC hotel sector. Momentum is rising and the market continues to gain strength. FelCor Lodging Trust’s executive VP and CFO, Andrew J. Welch, explains that the outlook is fine for New York City. Welch says that we are seeing seven out of ten hotel rooms sold in the city.
“…New York’s always very strong,” insists FelCor Lodging Trust’s executive VP and CFO.
NYC pipeline: Manageable growth?