Hotel construction is at a relative standstill as lenders continue to tighten their belts to ward off further commercial real estate losses, according to a revised 2010 forecast from Lodging Econometrics. The research firm now predicts the opening of just 717 hotels with 82,620 rooms this year, 56 percent fewer than in 2009. In October, Lodging Econometrics had predicted 988 new hotel openings for 2010, but “the near-disappearance of lending” has led to a historically high number of project cancellations and postponements. In the fourth quarter of 2009, there were 767 hotel projects under construction — the lowest level in more than four years — and that number is expected to fall further still. Meanwhile, construction starts totaled 119 projects during the quarter, the lowest since the beginning of 2002. Though the drop-off in new hotel developments is bad news for the construction industry, hotel owners may breathe a sigh of relief as there will be fewer rooms than previously expected to absorb the increase in business and leisure travel. Smith Travel Research recently reported that close to 100 new hotels are slated to open in major U.S. cities this year — 46 of them in New York City. New additions to the market include Hyatt’s 253-room Andaz hotel at 75 Wall Street, which opened earlier this month, and the James Hotel, which is expected to open in Soho this summer. TRD

There are close to 100 new hotels slated to open in major U.S. cities this year and 46 of them will be located in New York City, according to Smith Travel Research. The additions to the market — including five from Marriott under the Courtyard and Fairfield Inn brands and six from Starwood under the Sheraton, Four Points by Sheraton, W, Aloft and Element brands — are unlikely to help the existing nightly glut of unoccupied hotel rooms in many regions, but their seemingly poor timing may be mere coincidence, said Mark Lomanno, Smith Travel Research’s president.
A new hotel can take two to four years to plan and one to four years to construct, so most developers for this year’s hotels were taking their chances several years ago, when the economic outlook was much rosier, Lomanno said. Last week, Hyatt opened a 253-room Andaz hotel at 75 Wall Street. The company plans to open another Andaz on Fifth Avenue and 41st Street in June. Developers’ misfortune will probably benefit travelers by driving prices down and providing more choices, but only for a few years, travel experts said. Lomanno explained that while this year will be a big one for new hotels, there are few properties scheduled to come online between 2011 and 2013.

There are positive signs on the horizon for the New York City hospitality market with figures showing glimmers of good news and new hotels opening. According to Steve Hood, senior vice president of information technology at Smith Travel Research, 15 of the top 25 hotel markets saw an uptick in occupancy for the second week of October, to the overall tune of 27.4 percent. In Manhattan alone, the occupancy rate rose 5.6 percent. In Manhattan, the average room rate decreased by 15.4 percent to $253.61. Even though the city registered a decline, the average room rate was up 27 percent from January’s $199.09 average. Nationwide, occupancy rose 6.5 percent to 63.8 percent. The average daily rate increased 6.3 percent to $119.09 and the revenue per available room rate jumped 13.2 percent to $76.04. With the euro at record highs and the holiday season soon upon us, expect an increase in visitors to the Big Apple. These visitors will have the option of a whole host of newly completed hotels. [more]

From left: the Soho Grand Hotel, Tribeca Grand hotel and the Maritime Hotel are possible credit risks

The troubled hotel climate in Manhattan prompted securitized loan servicing firms to characterize five mortgages for hotels, including the Soho Grand, as potential credit risks last month. The move doubles the number of Manhattan hotels on so-called watchlists to 11. The largest loan is for a $195 million note covering both the Soho Grand and Tribeca Grand, which are both owned by Hartz Mountain Industries. The loan was put on the watchlist in part because the hotels do not generate enough cash to cover the debt service payments, its servicer report says. [more]

The global recession and the credit crisis are having an effect on new
hotel construction throughout the U.S., especially in New York City.
Total projects under construction in the U.S. have fallen 20.1 percent
since last year, with a corresponding 27.2 percent drop in the number
of rooms, according to the June 2009 STR/TWR/Dodge Construction
Pipeline Report released exclusively to HotelNewsNow.com, a division of Smith Travel Research. [more]

After four months of weakness in hotel occupancy, the outlook is getting brighter for the local hospitality industry. According to Smith Travel Research, the U.S. hotel industry posted
declines in the three key performance measurements during the week of
April 26 to May 2, 2009. Year-over-year, the room occupancy rate fell 11.6 percent to 55.7
percent in the week ending May 2. The average daily room rate dropped
8.6 percent to $99.41, the data shows. The revenue per available room,
or revpar, for the week decreased 19.1 percent to $55.53. [more]

From the May issue: New York hoteliers are used to collecting accolades for their luxurious rooms and top-chef cuisine, but the economic meltdown is bestowing an unwelcome new distinction on the city: worst-performing hotel market in the United States. The city earned the title by leading the nation last month in a decline in revenue per available room, or revpar. In the trailing month through April 11, the most recent data available at press time, New York logged a stunning 34.5 percent fall, according to Smith Travel Research. That’s even worse than the nationwide revpar drop of nearly 20 percent in the most recent trailing month. (Other cities, including Chicago, are taking it on the chin, as well, with declines worse than the national average.) For all of 2009, this crucial benchmark of hotel health is expected to drop 26.1 percent in New York City, the worst revpar performance among U.S. cities, according to hotel industry research firm PKF Hospitality Consulting.

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From the May issue: New York hoteliers are used to collecting
accolades for their luxurious rooms and top-chef cuisine, but the
economic meltdown is bestowing an unwelcome new distinction on the
city: worst-performing hotel market in the United States. The city
earned the title by leading the nation last month in a decline in
revenue per available room, or revpar. In the trailing month through
April 11, the most recent data available at press time, New York logged
a stunning 34.5 percent fall, according to Smith Travel Research.
That’s even worse than the nationwide revpar drop of nearly 20 percent
in the most recent trailing month. (Other cities, including Chicago,
are taking it on the chin, as well, with declines worse than the
national average.) For all of 2009, this crucial benchmark of hotel
health is expected to drop 26.1 percent in New York City, the worst
revpar performance among U.S. cities, according to hotel industry
research firm PKF Hospitality Consulting. [more]