NOT BLUE, AFTER ALL
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|It’s important to separate NYC’s hospitality performance from the rest of the country, says Cushman & Wakefield Sonnenblick Goldman hotel guru Mark Gordon. On a relative basis, the Big Apple continues to be strong. NYC is experiencing the highest occupancy rate (85% for September), compared to the top 25 US markets' 60% average. Give credit to supply constraint, as Midtown has not seen much full-service or luxury room supply since the development of the Mandarin Oriental in ‘03 and the Westin Times Square in ’02. Approximately 4k rooms have been converted to residential since ‘02, resulting in further Midtown supply decreases, he says.|
|As room rates fall, Mark continues, NY’s become much more affordable to global tourists, and as the economy—particularly the financial services industry—begins to improve, the corporate traveler will return. Over the short term, the biggest challenge will be to gradually increase rates. Expect improvement into ’10; also expect a more active hotel finance market, which catalyzes acquisition activity. It’s already begun—CWSG’s Global Hospitality Group recently arranged a $43M refinancing of the Courtyard Manhattan/Midtown East on behalf of DiamondRock Hospitality, and the team’s working on several other financings and equity capitalizations.|