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New York City Hotels

A New York City Hotel Glut Coming?

December 7, 2007 at 12:46 PM | 0 Comments

We've commented before on the outrageous hotel prices in New York City and noted that this market saw the biggest increase in rates over the past year. That kind of revenue opportunity makes real estate developers salivate, so Thompson Hotels and others have been on a building spree this year.

The hotel industry is known for getting caught up in booms and busts though, so this New York Sun article strikes a cautionary tone: Amid Boom, a Fear of Glut in Hotels.

There's nothing close to a glut right now, of course. "Many hotels in Manhattan will exceed 90% occupancy for the year, and some are likely to exceed 95% occupancy." But when 20, 30, or 40 new hotels open up in one year--and maybe the economy takes a breather--then what? "There will be a lot of pain," a principal at BD Hotels, Richard Born, said. "Budget hotels being developed for $400,000 per key and luxury hotels being developed for $1 million-plus per key will not survive." (Yes, you read that right, developing a hotel in Manhattan can cost a million bucks per room.)

Bad news for hoteliers could mean some rate relief for us commoners who are avoiding the city until prices return to sanity. Keep building please!

[Photo: Standard NYC Hotel, Opening in '08]

Related Stories:
· Amid a Boom, A Fear of Glut in Hotels [NY Observer]
· Hotels in New York [HotelChatter]