The Big Apple’s Bumper Crop of New Luxury Hotels
Lodging analysts are warning that supply growth in Manhattan has reached a point where it is beginning to outstrip demand, putting downward pressure on rates.
According to Smith Travel Research, as of June there were 14,630 hotel rooms under construction in New York, the most of any of the top 26 U.S. markets. Even more startling, this represents 13 percent of the existing rooms inventory. In June, average daily rates were already down 1.5 percent, compared to June 2014.
The message for developers? Stop building, particularly in Manhattan.
Is this good news for planners? Generally, yes. More hotels means more competition, which in turn means more negotiating room and lower rates.
But good news specifically for planners of high-end meetings? Not necessarily. Developers of luxury hotels in Manhattan have a history of beating to their own drum and they continue to build, regardless of the high cost and high barriers to entry. Many of these hotels, but not all, are part of mixed-use developments that combine lodging and high-end condominium residences. Others are adaptive reuses of existing historic buildings. Some, of course, are ground-up new construction.
Fortunately for these developers, demand continues to grow for luxury product and the increasing supply continues to get absorbed.
Underlying the trend is the continuing appeal of Manhattan as a group luxury destination, whether for conferences, board of director meetings or incentive programs. Part of the appeal is that the island remains the country’s center of finance, fashion, media, and advertising. Add to this attractions like Broadway, The Met (Museum and Opera), SoHo, Tribeca, world-class shopping and restaurants, and the list goes on.
Recent additions to the luxury lodging canon include the 214-room Baccarat Hotel & Residences, the 273-room Edition New York and the 229-room 1 Hotel Central Park. Under construction or on the drawing board are the 300-room Virgin Hotel, the 190-room SLS Park Avenue, and the 200-room Equinox Hotel, among others. All have event spaces and varying amounts of traditional meeting rooms.
The Baccarat, named for the luxury French crystal company, is well located in midtown across from the Museum of Modern Art. Edition New York, developed by Ian Schrager and Marriott International, is an adaptive reuse of the distinctive 1909-era, 41-story Clocktower Building overlooking Madison Square Park that was the original headquarters of Metropolitan Life Insurance. Another office-to-lodging adaptive reuse, eco-friendly 1 Hotel Central Park, is a block from the park.
The Virgin Hotel and adaptive-use SLS Park Avenue are both in the emerging NoMad district. The Equinox Hotel—the first of a proposed brand focused on fitness—will occupy 11 stories of a 79-story mixed-use tower in the sprawling Hudson Yards development under construction on the Far West Side.
Most curious of the latest crop of luxury hotel projects—with only 14 rooms—is the Restoration Hardware Hotel planned for the fashionable Meatpacking District. Well suited for discreet board of director of C-suite retreats, the hotel is owned and operated by the upscale home furnishings chain. To get a sense of the interior design, planners need only check the latest mail order catalog.
Photo credits: Cover photo, The Baccarat’s Grand Salon, courtesy of Baccarat. Top, clockwise: Front Desk, courtesy of The Baccarat; Grand Classic King guest room, courtesy of The Baccarat; guest room, courtesy of Edition New York.