The Real Deal New York

NYC’s hotel shortage offers opportunity to investors

March 30, 2012 09:30AM

As the city’s residential recovery remains uneven and its office sector is mired in a slump, and investor’s best play is the city’s hotel industry, according to an investor newsletter sent by Seeking Alpha.

While the city currently has 133 square feet of office space per worker and one residential unit for every 2.02 persons, New York has just 90,000 rooms to service its 50 million annual tourists — which average out to 137,000 visitors per day.

Seeking Alpha said those figures clearly represent a supply problem.

However, because there’s no REIT that invests solely in the city’s hotels, it’s difficult for investors to capitalize on this shortage. Seeking Alpha points out that Hersha Hospitality Trust has the greatest exposure to New York City hotels among U.S. hospitality trusts, with 19.4 percent of its portfolio located in the city. Pebblebrook Hotel Trust, LaSalle Hotel Properties and DiamondRock Hospitality Company also have exposures of at least 11.65 percent. [Seeking Alpha]