The unexpectedly fast recovery in the Manhattan hotel market has spurred developers such as Sam Chang and Hidrock Realty to dust off once-stalled projects or start new ones as room rates and occupancy levels have grown over the last year.
“We are seeing renewed interest in projects that have been stalled,” hotel consultant John Fox, a senior vice president at Colliers PKF Consulting, said. “Despite significant additions to the supply of rooms over the past few years, occupancies are at levels approximating those before the declines that started in September of 2008.”
To make the projects more financially stable, hotel developers in some cases added rooms and in others cut them back or just cut down on high-cost extras, said architect Gene Kaufman, who was one of the city’s most active hotel architects during the boom years.
“The conventional wisdom was that the hotel industry would be back in 2013 but in New York, the market has already been back for quite some time,” he said. “The five-year plan happened in two years.”
Kaufman provided data on seven of his projects that had been stalled or otherwise affected by the downturn, including three projects from Chang’s prolific hotel development firm McSam Hotel Group, and two by Abraham Hidary’s Hidrock Realty (see chart below).
Unlike the residential and office markets, where construction remains slow, development in the city’s hotel market has increased this year because of improved hotel revenues, experts said. For the first nine months of the year, occupancy was up by 6 percent compared with 2009, and revenue per available room was up 13.6 percent, figures from Colliers PKF show.
Chang, who before the market crash was considered the most prolific hotel developer in the city — with some 5,500 hotel rooms under development in mid-2008 — has kept a lower-profile in recent years. But he quietly restarted projects such as the Holiday Inn at 150 Delancey Street, on the Lower East Side; Holiday Inn Express at 538 West 48th Street in Clinton; and Hyatt Place at 210 East 52nd Street in Midtown East, information from Kaufman’s firm, which is designing the hotels, shows.
Kaufman said Chang was going to restart more projects.
“These are the first ones to come off the shelf. There are going to be others. Actually he was building throughout the downturn,” Kaufman said.
McSam Hotel Group did not respond to e-mails seeking comment.
Kaufman said some projects have not changed in size, but just cut back on costs, such as Chang’s 132-room hotel at 150 Delancey Street, which has seen savings in the hundreds of thousands of dollars through a reduction in dining areas, for example.
But some hotels saw their key counts altered.
Chang’s Holiday Inn Express, at 538 West 48th Street, cut back the rooms slightly to 179 from pre-recession levels, and the 250-room hotel at 120 West 57th Street increased the number of keys by about 10, Kaufman said.
“These are two properties where, with the improvement in hotel fundamentals over the past 12 months, and fresh equity, they became economically viable hotel sites,” Hidary said.