Hotels New York hotel market booming, and not just midtown Manhattan By Jeri Clausing / May 04, 2011 Share 1 -- NEW YORK -- The first time I laid eyes on New York's Greater Harlem neighborhood, it was from a walled promenade on Morningside Drive, on the east side of Columbia University. Looking out over a wooded bluff, I watched a group of youths breaking into a car. That was in 1992, before the much-publicized gentrification of what was then among Manhattan's most dangerous neighborhoods. My most recent trip to the Big Apple, in March, marked my first return to Harlem in 19 years, this time to the heart of a now trendy neighborhood to take in one of the city's newest hotels, the Aloft Harlem. The opening of the Aloft last year, just two blocks from Harlem's renowned Apollo Theater, was a historic event for this much-changed neighborhood, giving Harlem its first major hotel in more than 40 years. But it is also a symbol of the health and diversity of the New York hotel market. Not only are the city's hotels thriving, their numbers continue to grow, and they are spreading far beyond the industry's traditional midtown roots into boroughs and neighborhoods where tourists just a few years ago might never have thought to venture, let alone stay. The new hotels are particularly attractive for repeat visitors weary of the midtown scene, said Chris Heywood, vice president of travel and tourism public relations for NYC & Company, the city's marketing and tourism agency. "For repeat visitors ... they do look for something a little different," Heywood said. "They want to feel like they are living like a New Yorker, living like a local, and I think sometimes these hotels really lend themselves to those who are seeking something more experiential in the city, off the beaten path a little bit." While many of the new hotels in downtown and neighborhoods like SoHo are luxury and boutique properties, many of the new hotels offer tourists less expensive options. Before the economic downturn, it was hard to find a decent hotel room in Manhattan for under $500 a night. Anything cheaper was risky. "That was a big perception challenge that we had to deal with," Heywood said. But thanks to a building boom that began before the economic collapse, the city now has a growing list of reputable midscale brands from all the big hotel companies. And their properties are popping up from midtown to Brooklyn to Queens, downtown and trendy neighborhoods like SoHo. "There is a lot of variety of experience, of location, of budget, so you can literally spend $100 or $1,000 on a room in New York," Heywood said. "I think the fact that there are these options makes it more compelling and it expands our audience. People who might not have considered a trip five years ago may start to reconsider, and they won't be turned away by the price point." Indeed, despite trying economic times, people are still flocking to the Big Apple. New York drew a record 48.7 million visitors in 2010, a higher-than-expected 6.8% increase over 2009 and a number that keeps the city on pace to meet its goal of attracting 50 million visitors a year by 2012, according to Mayor Michael Bloomberg's office. The hospitality industry added 6,600 jobs in the city last year, employing more New Yorkers in 2010 than ever before. The city also set a record for hotel rooms added and hotel rooms sold, while attendance at cultural institutions rose. Surviving disastersWith the 10th anniversary of the Sept. 11 terrorist attacks on the horizon, the numbers show that New York has survived not one but two events that had the potential to -- and many predicted would -- devastate the city's hospitality and tourism markets. The second was the September 2008 collapse of Lehman Brothers, the first domino to fall in what would become a rapid collapse in the financial and banking industries. Some "thought it was the end of New York as we know it," said Jan Freitag, vice president of global development for Smith Travel Research, which tracks hotel performance and development around the globe. But, just like after 9/11, the tourism market and hotels rebounded. In fact, coming out of the most recent economic downturn, New York led the hospitality industry. During the first quarter of 2011, hotel occupancy in New York was 70.1%, fifth in the top 25 markets tracked by STR and well above the 54.9% national average. For 2010, the city posted an average occupancy rate of 85%. Average daily rate in New York leads the country at $197, almost twice the national average of $99.37. "It was quite interesting," Freitag said. "The coastal markets -- Boston, New York, San Diego -- got hit disproportionately harder [at the beginning of the downturn], but they also bounced back more quickly." While New York rates are climbing, the average rate is still about $100 below the city's peak. But even with all the supply, Freitag said he expected rates and occupancy to continue climbing. 90,000 rooms and countingNew York tops the list of target markets for virtually every global brand looking to expand. And the strong demand is evident in development activity across all five boroughs. Last year, more than 30 properties opened, adding some 500 new rooms to the city's inventory every month, according to NYC & Company. Since 2008, nearly 14,000 new rooms have come online, giving the city an active inventory of nearly 90,000 rooms. Another 24 hotels are expected to open this year, including newbuilds, renovations and redevelopments of iconic and historical buildings. Just as telling, 40% of the hotels opening in 2011 are in New York's outer boroughs: Queens, Brooklyn, the Bronx and Staten Island. And it's in those boroughs, such as in Long Island City in Queens, where visitors can find great deals. "That's where you can find extraordinary value but you are very, very close [to Manhattan]," Heywood said. "I think there is a perception gap there, where people think it is really much farther than it is. You can hop on the N train from Fifth Avenue or Bloomingdale's and you get out to the Holiday Inn [in Queens], and realize that you did it in about 10 minutes. And so you'll have a Holiday Inn and a Four Points by Sheraton. There is also a Country Inn & Suites." The trend is similar in Brooklyn, which recently got a full-service Sheraton and will soon have an Aloft and a Fairfield Inn & Suites. At the Aloft Harlem, sales manager Patricia Gilles said rates were 15% to 20% lower than in midtown Manhattan. And the hotel is popular with visitors to nearby Columbia University. The Aloft, a lifestyle brand designed by Starwood as a "little sister" to its W brand, features the WXYZ bar, which has become a popular watering hole for the neighborhood. A number of familiar midscale brands are also popping up around Manhattan, offering less expensive options in midtown and the typically pricey downtown and SoHo neighborhoods. Near the Port Authority and the new New York Times building, for example, in what used to be one of Manhattan's sketchier neighborhoods, there is a now a lineup of Staybridge Suites, Four Points by Sheraton, Holiday Inn Express and Fairfield Inn. The rooms might be smaller than one would find in a typical midscale "suites" product in, say, the Midwest, but the hotels offer reliable, affordable new options in midtown. "It's not a consolation prize to stay in a limited-service property anymore," Heywood said. "I think the Staybridge Suites is one example where it's a very comfortable property. It's great for business travelers. It's very accessible. And you don't have to give up what you are used to ... or if you are a business traveler have that experience compromised by staying in a different type of hotel." Luxury livesStill, the influx of midscale brands is not threatening New York's reputation as the lap of luxury. The building boom has also brought a wide range of new, high-end products, both from the big brands and independent and boutique operators. In Manhattan the ultraluxurious Chatwal recently opened, joining Starwood's Luxury Collection. InterContinental has a new flagship in Times Square. Hyatt's new upper-upscale Andaz brand now has two hotels in New York, one in midtown and another downtown. SoHo has welcomed a number of new high-end properties, including a Mondrian, the Crosby Street Hotel and Trump SoHo, to name a few. At the same time, a Courtyard by Marriott is opening in SoHo. "That's kind of the beauty of all this," Heywood said. "All these various brands at different price points coexisting in the same neighborhoods."