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Thread: Bookings Are Down, but Properties Keep Opening - Hotels

  1. #1

    Default Bookings Are Down, but Properties Keep Opening - Hotels

    April 6, 2003
    Bookings Are Down, but Properties Keep Opening

    Despite a decline in bookings attributed to economic softness and the uncertainties of the war in Iraq, hotel operators have been showing confidence in the future of travel to New York by opening new projects and refurbishing older properties.

    "You have to take the long view," said Vijay Dandapani, the chief operating officer of Apple Core Hotels, a privately owned company that operates five hotels in Manhattan. "A downturn is a good time to do construction projects."

    One such project is a $2.5 million refurbishing of the lobby of the building at 17 West 32nd Street, which was designated as a La Quinta Inn last December, after being operated for several years as a Best Western. It is the only outlet in Manhattan for La Quinta, a midprice chain based in Dallas.

    A few large hotels have opened since attacks of Sept. 11, including the Westin New York at Times Square, with 860 rooms, and the W Hotel Times Square with 509 rooms, but most have been smaller projects. These include the Hotel 41 at Times Square, 206 West 41st Street, which has 47 rooms, and City Club at 55 West 44th Street, which has 65 rooms.

    "It is a tough environment right now, with bookings slowed to a crawl and cancellations up 20 to 30 percent" since the beginning of the war, said Sean Hennessey, director of the New York hospitality practice for PricewaterhouseCoopers, an accounting and consulting firm. "But New York will come back."

    According to NYC & Company, the city's travel and promotion operation, some 2,100 hotel rooms have been added since the attack on the World Trade Center, either through renovation or new construction. Projects already under construction are continuing and those in the planning stage appear to be proceeding as well, said Christyne L. Nicholas, the group's president. "I have not heard of a single cancellation" of a project, she said.

    The reopening of the 561-room Millenium Hilton at 55 Church Street, now scheduled for May 1, will bring back into service the last of the hotels temporarily closed because the Sept. 11 attack, she said. The attack led to the closing of 1,528 rooms in all.

    She said most promotional efforts are aimed at attracting visitors from no more than 500 miles away — a distance considered close enough for a family to drive.

    INTERNATIONAL visitors are not considered good prospects while hostilities continue, although the city may benefit from American travelers who decide they do not want to visit Europe this year, she said.

    One foreign market that is being subject to serious promotion, however, is Japan, in connection with sporting events, Ms. Nicholas said. The presence of the slugger Hideki Matsui, a former home run leader in Japan, on the Yankees is one lure. A planned preseason game between the Jets and the Tampa Bay Buccaneers in Tokyo on Aug. 1 may whet Japanese appetites for football. "It makes sense to try to lure the Japanese," she said.

    The falloff in visitors to the city since the war began follows the pattern of the Gulf War in 1991, she added, although not so badly thus far. The occupancy rate is currently just below 70 percent, while in 1991 the rate fell below 60 percent, according to Ms. Nicholas.

    Most executives say it makes sense to complete projects that are under way, despite the drop in occupancy and advance bookings. The Westin Times Square, which is part of the E-Walk development of Tishman Realty & Construction, opened last October with 400 of its 860 guest rooms ready for occupancy. The hotel will be fully open by the end of the month despite "a temporary but not insignificant drop in call volume," said William J. Sales, the president of the Tishman Realty Corporation, a management unit of the parent company.

    He said changes in the neighborhood of the hotel, which is at the corner of 43rd Street and Eighth Avenue, had altered the mix of visitors from what was expected when Tishman signed the lease for the site in 1996. "We have had a lot more corporate visitors than we originally planned," he said.

    Since the Durst Organization announced the plan to build what is known as 4 Times Square at the northeast corner of 42nd Street and Broadway, Times Square has become a magnet for large corporations. These include the publisher Condé Nast, the anchor tenant at 4 Times Square, along with Reuters, the news and financial information company, and Ernst & Young, the accounting firm.

    "We have 5 million square feet of office space in the area now," Mr. Sales said. "It was part of what we hoped for the future, but it was not in place at the time."

    ANOTHER project that is going forward is the Gansevoort, a 13-story 187-room hotel that is under construction at 13th Street and Ninth Avenue, in an area that was best known for its meatpacking operations. "We will be topped out by the end of April," said Michael Achenbaum, a principal of WSA Management Ltd., the developer of the project.

    He said the area, which retains remnants of its industrial past, is "one of the most interesting in the city, like SoHo was in 1990." He said construction during a slack period was less costly than when business is booming and said the opening this fall might be timed to meet an upsurge in travel.

    "We don't build at the height of the cycle, so we can expect an upside," he said. The hotel, whose distinctive feature will be a 45-foot outdoor pool on the roof, will be operated as a high-end boutique, with a basic room rate of about $300 a night. It will be managed by Henry Kallen, who developed such boutique properties as the Giraffe and Library hotels.

    Mr. Achenbaum said Mr. Kallen was chosen because of his emphasis on service for guests. "Service is very important in a high-end boutique hotel," he said, "We want people to come back."

    The barriers that must be surmounted before building can proceed in New York are so formidable that anyone who has overcome them has an incentive to push a development to conclusion, said hotel industry consultants. "From the original concept to completion of a hotel is a least a two- to three-year process," said John A. Fox, a senior vice president of PKF Consulting, which specializes in hotels. "So we will see the opening of anything that is in the pipeline."

    Mr. Dandapani of Apple Core Hotels said the purpose of the lobby remodeling at the La Quinta Inn is to give business travelers the same sort of feeling that they would have at the 350 or so other hotels in the chain. This is a more challenging task in a 1904 building with a landmarked exterior, however, than with a new building in the chain's home markets in the southwestern United States.

    To add to the impression that everything is up to date, despite the Beaux-Arts facade with its columns and keystones, Apple Core is installing a wireless Internet access system that will be available free to guests, he said. "It is like the free continental breakfast we offer," Mr. Dandapani said. "It is for the business traveler who wants to do his work, have breakfast and get going."

    The property was built as the Aberdeen Hotel, a residential hotel, at a time when the Herald Square area was the city's leading entertainment district. Over a century the bright lights faded and the neighborhood became best known as a home for crime-filled welfare hotels, including the notorious Martinique at the corner of 32nd and Broadway.

    The Martinique is now a Holiday Inn, and the neighborhood is now home to a large concentration of Korean restaurants and stores. "What a difference 10 years makes," Mr. Dandapani said. "When we took control of the property in 1993, it was a single room occupancy place with a few transient guests. Now it is very safe with a lot of nighttime activity."

    He said that despite the current downturn, Apple Core is building a La Quinta Inn near McArthur Airport on Long Island to take advantage of the chain's ties with Southwest Airlines, which uses the airport as an entryway to the New York market.

    "People have written New York off time and again," he said. "But they always come back." *

    Copyright 2003 The New York Times Company

  2. #2
    Forum Veteran
    Join Date
    Jan 2003
    Garden City, LI

    Default Bookings Are Down, but Properties Keep Opening

    Makes sense, I guess. If the costs are down, it's always a good time to build. *It's really great to see people really believe in NYC and support it, knowing that times will be better.

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