This week's GLOBAL HOTEL NETWORK (SM) REPORT focuses on
New York City. Amelia Lim, Associate, Jones Lang LaSalle
Hotels (New York City) reports:
It's hard to believe that the New York City hotel industry was in a
recession in 1991, when the war in the Persian Gulf hampered the
national and regional economies. At that time, local hoteliers
lobbied city officials for a lodging tax reduction in order to attract
more visitors. In 1996, taxes were reduced by 6.0 percentage
points to 15.25 percent. City officials got the hoped-for increase
in visitation and a whole lot more: the average room rate has increased
by 50.0 percent overall since 1994. Of course, the reduction in
hotel taxes was not the only driver contributing to the industry's
recovery -- New York City's gateway location, excellent business
infrastructure and diverse cultural amenities attract a wide range of
businesses, tourists and conventioneers. Reflecting the City's
various facets of appeal, occupancy and average
daily rate levels for the local lodging industry have consistently been
the highest in the United States.
Obviously, New York City's average daily rate and occupancy are higher
than other major cities in the nation. To put this into
perspective, the City's 1999 RevPAR ($154.51) was 50 percent higher than
its closest competitor, San Francisco ($104.47) and 100 percent greater
than Chicago ($77.06). On numerous fronts, the City is continuing
to reinvent itself in new and dramatic ways, ranging from updated city
institutions to museum expansions, from neighborhood revitalization
efforts to major construction projects, and from important airport
improvements to enhanced train service. Tourism represents one of
New York City's dominant economic sectors in terms of generating tax
revenue and employment. In 1998, New York City visitor spending
totaled more than $14.8 billion. According to the most recent
statistics available (as of March 2000), the New York Convention &
Visitors Bureau (NYCVB) estimates that visitor spending in 1999
increased to nearly $15.5 billion and is forecasted to exceed $16.4
billion by 2000.
Crime remains at one of its lowest points in 35 years and the economy
has boomed in recent years, notwithstanding the consolidation of several
financial powerhouses. The expanding frontier of high-technology
commerce has also had a significant influence on the City's economy.
As of year-end 1999, new media employment was up by 105 percent compared
to 1995 levels. The City has developed a number of incentive
programs to encourage high-tech entrepreneurs, including Plug 'n' Go
(which earmarks Silicon Alley buildings for conversion to fully-wired,
Internet-ready spaces with affordable leases) and the Discovery Fund
(which invests amounts between $1 million and $9 million in growing New
York City-based advanced-technology companies).
With a newly scrubbed image, steady growth in commerce and unprecedented
investment in transportation infrastructure by the public and private
sectors, hotel operators and developers now consider New York City to be
one of the most attractive investment locales in the nation. The
City's renaissance epitomized by the gentrification of marginal
neighborhoods such as Times Square, Hell's Kitchen and the Meat-Packing
District has fueled tourism levels to an all-time high, leading to
the lodging industry's boom.
Average room rates in New York City for 1999 were the highest in the
nation at $189.58, an improvement of 5.2 percent compared to the
previous year. San Francisco was the second-highest ranked lodging
market in the nation last year, with average daily rate levels of
approximately $135. Occupancy for hotels in New York City at
year-end 1999 was 81.5 percent, a decline of 0.2 percentage points
compared to 1998. The marginal fall off in the 1999 occupancy
level resulted from operators that optimized profitability by
controlling increasing room rates through yield management. During
the first half of 2000, occupancy in New York City increased to 84.4
percent, the highest level in recorded history and ADR increased by 8.0
percent compared to the same period in 1999, to $224.83.
New York City is currently the largest first-class hotel market in the
United States, and ranks among the top ten markets in terms of overall
inventory, with more than 72,000 rooms contained within its five
boroughs. The Borough of Manhattan, with a base of approximately
64,000 rooms, contains the majority of New York City's hotel supply.
By 2003, analysts estimate that the Borough of Manhattan could contain
more than 70,000 hotel rooms. Lodging development trends include
conversion of functionally obsolete office space and boutique-style
properties with highly individualistic design concepts.
Additionally, developers are venturing some distance from the City's
traditional hotel core in Midtown Manhattan, to neighborhoods such as
SoHo, TriBeCa, the East Village, Chinatown, the Financial District, and
the outer Boroughs of Queens and Brooklyn. A sampling of new hotel
projects, representative of the types of development currently
occurring, are outlined below:
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NEW DEVELOPMENT PROJECTS
_______________________________________________________
W Union Square, 270 rooms
Park Avenue South, est. opening: 2000
TriBeCa Grand, 203 rooms
TriBeCa, opened 2000
Red Roof Inn Manhattan, 172 rooms
Midtown, opened 2000
Courtyard by Marriott JFK Airport, 162 rooms
JFK Airport, Queens, est. opening: 2000
Holiday Inn Wall Street, 138 rooms
Financial District, opened 2000
The Dylan, 108 rooms
Midtown, est. opening: 2000
60 Thompson Street, 100 rooms
SoHo, est. opening: 2000
The Chambers Hotel, 78 rooms
Midtown, est. opening: 2000
Wall Street Inn, 810 rooms
Financial District, opened 2000
The Henry Hudson, 810 rooms
Midtown West, est. opening: 2001
Embassy Suites Battery Park City, 463 rooms
Battery Park City, est. opening: 2001
Greenwich Village Hotel, 195 rooms
West Village, est. opening: 2001
Garden View Hotel, 123 rooms
Queens, est. opening: 2001
Westin New York, 858 rooms
Times Square, est. opening: 2002
Ritz-Carlton Central Park South, 300 rooms
Central Park South, est. opening: 2002
Mandarin Oriental Columbus Centre, 250 rooms
Central Park South, est. opening: 2004.
Source: Jones Lang LaSalle Hotels Research
_______________________________________________________
Strong occupancy and average rate growth trends in New York City suggest
that there is a significant amount of unaccommodated demand in the
market, even at the uppermost pricing ranges. Strong economic
growth has driven average rates to peak levels in recent months.
Even assuming that there may be some deceleration in average rate gains
in the future as supply additions continue, the outlook for hotels in
New York City remains strongly positive due to indications of a deep
demand market which is anticipated to shore occupancy levels. New
York City's stability as a destination for travelers is underscored by
the fact that the lowest occupancy levels, recorded during the early
1990s, remained in the 70-percent range, whereas occupancy in some major
markets during that period plunged to the low 60-percent range.
Trophy hotel deals are commonplace in core urban markets such as New
York City. As investors flock to these markets, pricing continues
to set records for assets with prominent locations, quality physical
products and perceived growth. In 1999, there were 17 transactions
involving hotels priced at over $200,000 per key. During the first
half of 2000, there were seven transactions at that pricing level.
With few exceptions, these transactions involved New York City hotels
and resorts.
_______________________________________________________
New York City Hotel Sales 1999 to Current
Property, Sales Price (US $), Price per Key (ppk)
______________________________________________________
Four Seasons, $300 million, $808,625 ppk
The Sutton, $36 million, $422,619 ppk
Essex House, $250 million, $418,760 ppk
The Stanhope, $65 million, $351,351 ppk
Westin Central Park South, $63 million, $300,481 ppk
Hotel Lexington, $105 million, $246,647 ppk
Doral Park Avenue, $43 million, $228,723 ppk
Days Inn Midtown, $56 million, $151,424 ppk
Howard Johnson Plaza, $45 million, $151,424 ppk
Sheraton JFK Airport, $25 million, $135,870 ppk
Source: Jones Lang LaSalle Hotels Research
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GLOBAL WEB SITE RECOMMENDATIONS
___________________________________________
Hotel Association of New York City
www.hanyc.org
New York State Hospitality & Tourism Association
www.nyshta.org
___________________________________________
Copyright (c) 2000 Global Hospitality Resources, Inc.,
San Diego, CA USA www.globalhotelnetwork.com
All rights reserved. Reprinted with permission.
GLOBAL HOTEL NETWORK (SM) REPORT SPONSORS
HENRY STEWART CONFERENCE STUDIES
_______________________________________________________
WHAT ARE GERMAN HOTELS WORTH?
A ONE-DAY CONFERENCE
Monday 30 October 2000
Le Meridien Park Hotel, Frankfurt-am-Main
A detailed briefing for all those involved in disposal, acquisition,
operation and ownership of hotels, their agents and advisers.
Among the subjects covered in this conference are the following
subjects: Funding the acquisition of hotels with particular regard to
modernising / renovating
hotels the requirements of the lenders
*What is my hotel worth?
*The current market and discerning trends
*The German Hotel market in the context of Europe
*Changes in tax and law and their profound
consequences for the market
Speakers:
Matthias Schröder, Pannell Kerr Forster GmbH (Chairman)
Heather Saunders, Arthur Andersen Real Estate GmbH
Dr. Philipp Jebens, Gassner, Stock & Kollegen
Dirk Schuldes, Deutsche Bank Gruppe
Dr. Gisela Hank-Haase, ghh consult
Olivia Kayser, Jones Lang LaSalle Hotels
Horst Schaffer, Astron Hotels & Resorts AG
Bernard Forster, HVS International
Sibyl Jackel, PricewaterhouseCoopers
Wolfgang Rips, PricewaterhouseCoopers
Further information:
Alice Winkelman
Henry Stewart Conference Studies
Tel: +44 20 7404 3040
Fax: +44 20 7404 2081
Email: aliceW@henrystewart.co.uk
Website: www.henrystewart.co.uk
WAS SIND DEUTSCHE HOTELS WERT?
Ein Ein-Tageskonferenz
Montag 30 Oktober 2000
Le Meridien Park Hotel, Frankfurt-am-Main
Eine detailierte Betrachtung des Marktes für alle mit der Veräußerung,
dem Erwerb, dem Betrieb und dem Besitz von Hotels befaßten Personen,
ihre Bevollmächtigten und Berater.
Diese Konferenz behandelt, unter anderen, die folgende Subjekte:
*Finanzierung des Erwerbs und des Hotelprojektes - Anforderung der
Kreditgeber und Kreditnehmer
*Was ist mein Hotel wert?
*Der derzeitige Markt und die sich abzeichnenden Trends
*Der Deutsche Hotelimmobilienmarkt im Europäischen Kontext
*Auswirkungen der Unternehmenssteuerreform bei Hotelinvestitionen
Sprecher:
Matthias Schröder, Pannell Kerr Forster GmbH (Vorsitzer)
Heather Saunders, Arthur Andersen Real Estate GmbH
Dr. Philipp Jebens, Gassner, Stock & Kollegen
Dirk Schuldes, Deutsche Bank Gruppe
Dr. Gisela Hank-Haase, ghh consult
Olivia Kayser, Jones Lang LaSalle Hotels
Horst Schaffer, Astron Hotels & Resorts AG
Bernard Forster, HVS International
Sibyl Jackel, PricewaterhouseCoopers
Wolfgang Rips, PricewaterhouseCoopers
Weitere Auskünfte:
Alice Winkelman
Henry Stewart Conference Studies
Tel: +44 20 7404 3040
Fax: +44 20 7404 2081
Email: aliceW@henrystewart.co.uk
Website: www.henrystewart.co.uk
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AMERICAN HOTEL & MOTEL ASSOCIATION (AH&MA)
_______________________________________________________
Did you know that American Hotel & Motel Association
members have higher occupancy, higher ADR, and higher
RevPAR than nonmembers? AH&MA provides its property
members with resources to operate more efficiently and
more profitably. To learn more, visit www.ahma.com
or call
(800) 252-2462, ext. 4112.
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