Hotel rooms are becoming harder to come by in New York City.
Thousands have been eliminated or repurposed without an obvious replacement, leaving the sector in a critical time for its future, the Commercial Observer reported.
Since 2019, the city has lost 6,000 hotel rooms, according to JLL, half of which were in Manhattan. There have been 16,000 rooms converted to migrant housing as the city has tried to cope with the influx of arrivals. The brokerage estimates it will take roughly three years to revert migrant housing back to hotels and half of the properties will not return to their former status.
“Many of the owners will opt to use the hotels for longer-term housing, or maybe alternative multi-family uses. So a lot of the hotels may not return to the system,” JLL’s Kevin Davis told the Observer.
There are 8,000 rooms in the pipeline, but developers are largely frozen by the 2021 City Council bill that mandated a special permit for new hotel developments. While that doesn’t mean developers can’t build, it makes it much more challenging, as seen in the first year after the legislation’s passage. That’s created trouble as tourism levels have neared pre-pandemic levels.
“I think, long term, it’s definitely going to be a problem,” Lightstone Group’s Mitchell Hochberg said.
All of the factors limiting volume result in a jump in daily room rates, according to Ariel Property Advisors’ Shimon Shkury.
Read more
Politics
New York
Epic fail: How union, politicians botched a hotel “safety” bill
Politics
New York
How special are these permits? No one got any
Commercial
New York
New York Edition hotel hits market for $271M
New York isn’t alone in dealing with some of the headwinds blowing towards the hotel sector. Factors such as construction costs are crippling development across the nation, yet the Big Apple still leads the way in rooms under construction, according to Ian Dunford, director of research for the Hotel and Gaming Trades Council.
The arrival of a trio of downstate casinos could also provide a boost to the hospitality industry. Many of the proposals being submitted include at least one hotel in the plan, though state officials aren’t poised to award gaming licenses until next year at the earliest, meaning the properties are still likely years away.