Vacation-rental divisions put down roots in urban locations

Marriott Vacations purchased the Strand, a hotel in Manhattan’s Garment District.
Marriott Vacations purchased the Strand, a hotel in Manhattan’s Garment District.

Marriott Vacations Worldwide earlier this month agreed to acquire the Strand hotel in New York, reflecting a recent emphasis by some timeshare operators on boosting urban destinations to attract younger buyers and empty-nesters.

With the acquisition, Marriott Vacations, which didn’t disclose the purchase price of the 176-room property, will enter New York. The company had previously offered its customers access to a handful of Marriott International properties in New York, but it has not operated its own property in the city.

“We’ve been trying to be in New York for a long time,” said Marriott Vacations spokesman Ed Kinney. The hotel, located in Manhattan’s Garment District, “had all of the current updates to allow us to come in and manage it right away.”

While Marriott Vacations has offered urban options since taking over Boston’s Custom House more than 15 years ago, the company, which was spun off from Marriott International in late 2011, has substantially boosted its urban investment of late.

Last year, it entered Washington when it reached an agreement to take over one floor of the Mayflower hotel, which is part of Marriott International’s Autograph Collection. It also acquired downtown San Diego’s Declan Suites last year, and will convert the 264-unit, all-suites hotel to a Marriott Vacations-branded property by June, Kinney said.

Marriott is not alone in turning to urban properties. While Hyatt Residence Club and Starwood Hotels’ Vistana Signature Experiences have stayed clear of urban properties (Interval Leisure Group acquired the former in 2014 and is slated to complete its acquisition of the latter this year), Hilton Grand Vacations is also broadening its city inventory.

The company last year added the 161-room West 57th Street by Hilton Club while boosting the number of floors it occupies at the New York Hilton Midtown to three from two.

This year, Hilton Grand Vacations will take over three floors at a hotel under Hilton’s Embassy Suites badge near Washington’s Georgetown neighborhood, according to Hilton Grand Vacations COO Mike Brown.

Both Hilton Grand Vacations and Marriott Vacations, which operate about 110 vacation-rental properties all told, are looking to lure more timeshare-unit owners by offering more rooms in urban locations that often appeal to younger travelers as well as those with adult children. 

Marriott Vacations’ revenue for the 36 weeks ended Sept. 11 rose 4.9% from a year earlier, to $1.28 billion, while Hilton Worldwide’s revenue for timeshare operations through the third quarter of last year jumped 15%, to $850 million.

Granted, urban destinations still account for a minority of Marriott’s and Hilton’s timeshare inventory.

Kinney estimated that between 5% and 7% of Marriott Vacations’ rooms were in cities, while Brown pegged Hilton Grand Vacations’ percentage of urban rooms at closer to 25%, although he included Waikiki properties in that total.

Still, both companies expect their urban share to rise steadily in the next few years.

“Our success in New York has led us to believe there are opportunities in a number of markets such as Chicago and San Francisco,” Brown said.

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