Nobody Asked Me, But... No. 95 - By Stanley Turkel, MHS, ISHC
Strong Growth in NYC Demand, ADP and RevPAR; Dear Waldorf, Mummy Stole Your Teapot Back in 1935; Quote of the Month
1. Strong Growth in NYC Demand, ADP and RevPAR
• Autumn 2012
CBRE's Market View for New York City reports:
All major hotel metrics have shown improvement over the first half of 2012, especially in the Lower Manhattan and Times Square markets, which have exhibited year-over-year RevPAR growth of 9.7% and 7.55%, respectively, compared with mid-year 2011. City-wide RevPAR has grown 6.95%, amid increases in supply in several neighborhoods, speaking to the City's potential to absorb new product as it comes to market.
Market demand has continued to grow in 2012 as a result of growing neighborhoods and office markets, as well as continued growth in U.S. and international tourism. The Midtown South office market has experienced leasing velocity that has surpassed historical highs as office buildings have been acquired, renovated and repositioned to absorb a growing technology and media industry. This influx of new tenants has bolstered commercial demand in the area. International travel has also continued to grow at record pace despite economic uncertainty in Europe and slower-than-expected growth in China. The World Trade Center area has had its impact on demand, as tourists as well as local residents have crowded the area since the opening of the National September 11 Memorial Plaza.
The most prominent buyers of hotel assets in 2012 have been foreign buyers. The Sahara Group, of India, is in contract to acquire a controlling stake of the iconic Plaza Hotel and Plaza retail for $570 million, and is also reported to be in contract to acquire the Dream Hotel Downtown. In January, HNA Property Holdings, of China, acquired the Cassa Hotel for $130 million, or $787,879 per key, while Longham Hotels, of Hong Kong, has been actively seeking an acquisition opportunity to expand its brand into Manhattan.
In February, King and Grove Hotels, backed by Joseph Chetrit, has also been an active buyer, acquiring the Hotel Williamsburg, in Brooklyn, for $32,350,000 or $505,468 per key, and acquired the Hotel Lola in July for $116 million, or $420,290 per key. King and Grove also purchased the Hotel Chelsea in May 2011 for $80 million.
More recently, Strategic Hotels and Resorts acquired the Jumeirah Essex House at Central Park South for a reported $362.5 million or $699,807 per key for the 518-room property, with plans to rebrand the hotel as a JW Marriott at a cost of approximately $18.3 million, bringing the all-in acquisition price to $380.8 million.
New York City hotels hosted a record number of visitors in 2010 and 2011, surpassing all previous high watermarks in both years. Tourism is expected to continue to grow through 2012 and beyond, with the City's goal to reach 55 million visitors by 2015. The Manhattan hotel market has exhibited strong growth in demand and ADR over the course of 2012. City-wide RevPAR increased year-over-year amid significant increases in supply and continued uncertainty across the U.S. and international travel remains positive.
• October 9, 2012
Roland Li reports in the New York Times:
Defying the sluggish global economy, New York's hotel sector is growing at a record-breaking pace. In 2011, developers added 4,404 new hotel rooms to the city's existing 74,025 rooms, an annual increase of 5.9 percent and the highest on record, according to Smith Travel Research and the commercial real estate brokerage Cushman & Wakefield. Supply is projected to increase by 3.5 percent in 2012 and 4.1 percent in 2013. From 2005 to 2010, hotel room supply grew by 16.2 percent, for an average of only 3.24 percent annually.
New hotels range from high-end boutiques in Greenwich Village and Chelsea to budget chains in less fashionable parts of Brooklyn and Queens. In addition to the new rooms, large existing hotels have undergone major renovations, including the former New York Helmsley Hotel which reopened earlier this month as the Westin Grand Central after a $75 million overhaul.
The hotel building boom has been buoyed by occupancy rates and revenues that have rebounded close to prerecession levels. Tourists and business travelers have filled up the new rooms, despite the European debt crisis and economic slowdown in Asia. The citywide occupancy rate fell to 77 percent in 2009 after the financial crisis, but is has rebounded to more than 80 percent in each of the last three years....
Last year, tourism increased by 3.5 percent to a record 50.5 million visitors, according to NYC and Company, the city's official tourism group. In fact, New York is the strongest of the largest 25 United States markets by occupancy, according to Smith Travel Research.
Total revenue also rebounded to $7.21 billion in 2011, after plunging 22.6 percent to $5.48 billion in 2009, according to Smith Travel Research..... One of the most popular new hotel types is the small, high-end boutique, like the 113-room Jade Hotel, which will open on West 13th Street in Greenwich Village at the end of October.... Developers are also converting old commercial buildings into hotels, which are cheaper and quicker to complete than building from scratch. Older office buildings with small floorplates are well-suited for hotels, and they can be converted in commercial zoning districts where residential is forbidden, said Mr. McConnell of Cushman & Wakefield.
The Flatiron district has become a hotbed for such conversions. At the Metropolitan Life Tower, the clock tower overlooking Madison Square Park, Marriott International and the hotelier Ian Schrager are planning an upscale hotel conversion after buying the property for $165 million from Africa Israel USA last October. Five blocks north, the Sydell Group, the investor Ron Burkle and Square Mile Capital converted an aging Art Deco office building into the NoMad Hotel for $100 million. The 168-room hotel, at 1170 Broadway, opened in March. The Sydell Group previously converted the nearby Ace Hotel at 20 West 29th Street. Andrew E. Zobler, chief executive of the Sydell Group, said the Ace was one of the first hotels to have an active lobby, which regularly presents live music, helping to lure customers. "I think people are yearning for more of an experience," he said....
Developers are also aiming at neighborhoods in Queens and Brooklyn near transit hubs, including Williamsburg, Downtown Brooklyn and Long Island City. The outer boroughs accounted for 42 percent of all new hotels from 2006 to 2011, according to NYC and Company....
New projects include Two Trees Management Company's 72-room Wythe Hotel in Williamsburg, with nightly rates of $179 to $495, and an Aloft hotel in Downtown Brooklyn opened by Starwood Hotels & Resorts....
Large stand-alone hotel projects are rarely built now because high density sites are usually turned into offices or residential buildings. But one exception is a new 70-story tower under construction at 1717 Broadway, which will include a 261-room Residence Inn on the floors above a 378-room Courtyard by Marriott, making it the tallest all-hotel building in the United States. Extell Development's One57, designed as the tallest residential tower in the country, will have a 210-room Park Hyatt Hotel on its lower floors when it opens in 2013....
2. Dear Waldorf, Mummy Stole Your Teapot Back in 1935
This headline in the New York Times of September 26, 2012 tells the story of the Waldorf-Astoria's amnesty program: "Do you have a souvenir from New York's legendary Waldorf-Astoria hotel that perhaps you shouldn't have?" Matt Zolbe, Director of Sales and Marketing, said that the hotel did not start the amnesty program because it needed used silverware but because it was looking for attention on social media. He reported that about 15 people returned items such as silverware, coffee pots, coasters and teapots before the program ended on September 15th.
On the same subject, my research turned up the following report in The American Hotel by Jefferson Williamson (published in 1930 by Alfred A. Knopf):
|There is the guest who carries away "souvenir" spoons and other trifles, such as towels, sheets, rugs, lamp-shades, electric bulbs ̶anything and everything that is portable and can be pried loose. One New York hotel loses nearly two thousand napkins a month, worth $1.25 a piece. Another New York hotel reports a loss of $78,000 a year by thefts. A third figures about eighty cents average loss per guest, and still another has found that about one out of every six hundred steal. During a national convention of women in Cleveland a few years ago one hotel is said to have lost six hundred demi-tasse spoons. The losses from theft at this hotel two years ago amounted to $33,000. The secretary of the Ohio Hotels Association gathered figures showing that the hotels in its membership lost approximately twenty thousand towels a year. One could go on endlessly citing similar figures. All large hotels have heavy losses. It is part of the overhead. These losses are not caused by any particular type of guest, but by all classes. Three or four years ago the Milwaukee Railroad opened a resort hotel in Montana. Many invited guests were present, all people of prominence. The losses by theft on that occasion amounted to $1,800.|
3. Quote of The Month
"If this piece is about the Algonquin, we'd better begin getting there, and so to the Algonquin, which was not christened Algonquin but something quite different. The man who was about to open it, a Mr. F., sent for me (I had worked for him before) and made me a handsome offer, the best I had had up to that time, to start immediately. There was a temporary sign, one of those cloth affairs frequently seen on new buildings, and while the sign was temporary, the name was not. F. liked it. I didn't. It was the Puritan.
"What's the matter with it?" he demanded when I made my objection. "Isn't it American, hasn't it splendid, historical associations?"
I admitted that it had all that. "But," I said, "it has come to have, too, an additional meaning which contradicts the spirit of innkeeping. It is cold, forbidding, and grim. I don't like it."
"Well, I do."
"Well, all right, I'll stay where I am, for you are inviting a bust."
"You think yourself so smart," said Mr. F., "suppose you find a better name."
Determined that it should be an American word and not a Marseilles, a Piccadilly, a Heather, or a Lido, I went to the Public Library to find who were the first and strongest people in this neighborhood, stumbled on the Algonquins, liked the word, liked the way it fitted the mouth, and prevailed upon the boss to accept it. I can't say now that the Algonquins were especially hospitable to strangers or that they symbolized warmth and cheer, but I had forgotten all about that in my new love for the word. I was stuck on it and my boss was stuck with it, and I hope that the many years I have flown it at the masthead may have given it a meaning quite separate from tomahawks and scalping."
Tales of a Wayward Inn
Frederick A. Stokes Company, New York, 1938
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Stanley Turkel, MHS, ISHC
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