New York’s hotel market has mostly produced negative headlines over the past year amid fears of oversupply and declining international tourism. But Norman Sturner thinks the worries are overblown.
“The fact of the matter is that New York has 54 million (annual) visitors,” he said Thursday morning at a panel discussion hosted by the Deal Flow Network and moderated by The Real Deal’s publisher Amir Korangy. Sturner said any conclusion that a minor drop in the number of visitors would cause major problems for the hotel market is “just silly.”
Sturner’s MHP Real Estate Services [TRDataCustom] is currently developing the 29-story Dream Hotel near Times Square.
Like Sturner, Robyn Sorid calls widespread pessimism over hotel oversupply misplaced. “We see it as an overreaction,” the co-founder of bridge lender G4 Capital Partners said. G4 is currently financing two new hotel developments — one in Williamsburg and one in Tribeca — and Sorid said traditional lenders’ reluctance to lend on hotel projects has created an “incredible opportunity” for her firm.
An analysis from TRD in April found that hotel permit applications began nosediving in 2015, suggesting the building boom could be over. However, a more recent review of filings shows that hotel units in 2016 have risen above last year’s total, but still lag the 2013 and 2014 boom years.
Another boon to the hotel market could be a law signed by Gov. Andrew Cuomo that imposes a fine of up to $7,500 on anyone in New York City who illegally lists an apartment on Airbnb. “With the latest legislation, in any residential zoning you’re not going to be able to have Airbnb tenants,” said James Nelson, an investment sales broker at Cushman & Wakefield.
Metropolitan Realty Associates’ Todd Bassen sounded a slightly more cautious tone. “With the strong dollar we’re certainly seeing less tourists today,” he said. “And the question, is with the economy improving (…) are we going to pick up some of that tourism from the rest of the United States?”