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Hotel location becomes key

From the July issue: Before the economy collapsed last September, hotel developers rushed to do deals in almost any Manhattan neighborhood, from the Financial District to the Lower East Side to the far West Side, trying to cash in on the surging demand for rooms.

Now, as the local market suffers a double squeeze of plunging occupancy levels and thousands of additional rooms coming online, hoteliers and developers are facing the brutal reality that neighborhoods still matter a great deal in the Manhattan hotel business. It's becoming clearer by the moment that not all submarkets in Manhattan, which contains 83 percent of the city's hotel supply, were created equal.

"Many investors look at New York as an aggregate market … but I think that's misleading," said Mark Gordon, executive vice president, principal and head of the U.S. hotel group at Cushman & Wakefield Sonnenblick Goldman. "When customers come to New York, the vast majority of them want to stay in what I consider traditional locations." more