Having a silver anniversary? Throwing a conference? You’ll discover it is not so easy to find a large event space in a new Manhattan hotel. And whenever there is space, it may be located in an undesirable part of the building, like the basement — and as a result, may have no windows.
The stage for the space crunch was set when New York City lost some event space during the recent real estate boom. At that time, many hotels were converted to residential buildings. Compounding the problem now is the fact that there’s little new event space materializing because the majority of new hotels being built are typically too small to include the large, open rooms.
Between the credit freeze, the high costs of land and construction, and the current focus on limited-service hotels, New York City developers are not investing in hotel event space. That’s because generally a hotel developer will get a greater return on investment if he or she builds hotel rooms instead of event space, said John Fox, senior vice president and executive in charge of the New York office at hotel consultancy PKF Consulting.
Fox estimated that of the 100 hotels in the pipeline in Manhattan, 10 or fewer will have more than 300 rooms.
“The majority of [the 100] are limited-service, or select-service, that generally would not have much in the way of event space or meeting space,” noted Fox. He said the only way to quantify event space would be to consider each property one by one.
One prolific developer of select-service hotels, the McSam Hotel Group, generally does not include event space in its projects.
“Square footage is so expensive, we tend to gravitate away from that type of product,” said Gary Wisinski, COO of the group.
Kathleen Hurley, communications director for Lodging Econometrics, which produces national hotel reports, said that hotels with 200 or fewer rooms are “a niche not known for large conference/meeting spaces.”
Even some newer high-end boutique hotels — like Robert De Niro’s Greenwich Hotel at 377 Greenwich Street, Nobu Hotel and Residences at 45 Broad Street, W New York Downtown Hotel & Residences at 123 Washington Street, and the Mark Hotel and residences at 25 East 77th Street — are not including non-restaurant space for hosting functions.
One of the issues is simple economics: The credit crisis has affected meeting-related travel.
“The implication is that as meeting-related travel declines, so does the urgency for hotels with meeting space,” Hurley said.
As a result, at some large, fancy hotels, prime real estate — areas with windows and views — is reserved for guest rooms, not parties. The consequence is that the party space is in an undesirable part of the hotel.
For example, the Ritz-Carlton at Battery Park has two large ballrooms, but at the Ritz-Carlton at 50 Central Park South (home to Laurent Tourondel’s BLT Market restaurant), the 1,759-square-foot event space is in a windowless basement.
“Our hotel was developed as an intimate, transient hotel that caters to the traveler; thus, we find that guest rooms with stunning views of Central Park are more valuable and provide a greater return [than] would event space in its place,” said Dianna Tarallo, public relations manager at the hotel.
The Ritz-Carlton on Central Park South is not alone in reserving views for the guests.
At the iconic Plaza Hotel, there are no windows in the renovated 15,000 square feet of event space — including the grand ballroom.
Steven Rice, vice president and general manager of Central Park South Events—manager of the ballroom, meeting rooms and peripheral event space — said that while people enjoy windows and views, selecting an event space boils down to location and the look of the place. He noted the Plaza offers “historical and traditional landmark space” with a modern-day edge.
The way the numbers work, hotel guests beat out conference attendees or wedding celebrants.
“Guest rooms are the most profitable part of a hotel operation,” said Geoff Davis, president of the investment advisors group of Hospitality Real Estate Counselors, a hotel and casino advisory firm.
For every dollar brought in for a hotel room, the owner keeps $0.70, Davis said. For food and beverage (including events), the company retains just $0.10 to $0.15 on the dollar.
Even when there are conference rooms and event spaces, they are generally used to draw hotel guests, said Davis, who recently had to pay for a block of rooms in order to hold a conference at the Waldorf-Astoria.
“Everything is about filling rooms. Everything you do in hotels is about heads and beds,” he said.
A few years ago, the city lost a number of event spaces when some hotels, like the Stanhope and the Delmonico, were converted to condominiums. There’s now a rumor that the Helmsley Park Lane — which has a windowless ballroom and a $1 million renovated restaurant, the Park Room, overlooking Central Park — is the next to be going condo.
For those currently seeking a large party space, there are still options — including event rooms at large hotels, such as the Mandarin Oriental at 80 Columbus Circle, the Pierre on Fifth Avenue at 61st Street, and convention hotels like the Waldorf-Astoria. In addition, there are many large hotels in the Times Square area, and with the growth of the far West Side, there are more hotels in the pipeline for the area around the Jacob K. Javits Convention Center.