News
Despite Drops, NYC Hotels to Remain Profitable
December 8, 2008
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| Although New York's hospitality market has been clearly affected by overall U.S. hotel market trends, the city is expected to weather the storm while still posting higher-than-national average numbers, said CB Richard Ellis’ Hospitality & Gaming Group senior managing director Daniel Lesser, when we dropped by his One Penn Plaza office. In the worst-case scenario, if either occupancy levels or both occupancy and average room rates decline in the near future, they’ll drop from all-time highs. So the industry has been and will continue to be profitable. We were selfishly crossing our fingers for cheaper rooms, but he tells us that smart operators will allow occupancy drops while holding rate integrity. |
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| Dan with colleague Evan Weiss at 35th and 6th in front of the Hilton Garden Inn construction site and the next-door Hampton Inn, which recently opened. Hotels that are under development will still deliver, he tells us, but those not yet financed or still in the design phase will have difficulty getting financed. But there is still opportunity for limited-service hotels in select neighborhoods and a big-box hotel near the Javits Center. Next year will be challenging, but 2010 will see the beginning of a rebound: expect equity that has been building up on the sidelines to enter the market rapidly again, along with stable and relatively inexpensive hotel investment opportunities, and an increased tourist market as new middle classes grow in the world’s emerging markets and patronize U.S. hotel and retail sectors. Does this also mean more crowded sidewalks? |
