Discount hotel rooms nyc

Soft markets leads to lower rates

A New York City hotelier is giving the bear market some "bull." Barry Mann--general manager of the New Yorker Hotel--calls it his "No Bull Rate whereby a falling Dow will trim the cost of a room in his hotel.

"We're trying to provide some compensation to those who have taken a hit in the bear market. While the Fed has been cutting interest rates to spur the economy, we thought we'd, do our part with room rates, said Mann.

If the Dow closes down 50 to 100 points on the arrival date, guests will receive a $10 discount for each night. If the Dow nose-dives more than 100 points on that day, then Mann will discount their daily tab by $20.

"And if the Dow drops more than 500 points, we'll guarantee a room on a high floor with an open window!" quipped Mann.

It's a clever concession-cum-marketing-ploy, and it's emblematic of a hotel business getting pinched by the sluggish economy. Securing a hotel room in New York City has never been easy or cheap, with demand forcing occupancy rates up to 84 percent during the first two quarters of last year. Rates likewise hit inflated levels during those heady days of 2000. For the past six months, however, only 76 percent of Manhattan's hotel rooms were occupied.

That's good news for would-be hotel guests, as a cooling economy drives room rates down and availability up. Hoteliers, for their part, are getting pinched, though a 76 percent occupancy rate is hardly rock-bottom territory. This, among other data, was featured in PKF Consulting's "Trends in the Hotel Industry" report, issued recently. The release accompanying the report included some hedging statements on the relative health of this city's hotel sector. PKF's report polled 101 area hotels with a total of 43,034 available rooms.

"Like the first quarter of 2001, the six-month year-to-date is either good or bad, depending on your point of view," said John Fox, senior vice president at PKF's New York office.

Average daily room rates for New York City dropped 2.2 percent from last year's second quarter. Room rates as of June 2001 averaged $216.69, well above the 1999 level of $205.05 reported in the first six months of that year. Fox cited the slowdown in travel as one reason for the decline. The city is also absorbing some 3,800 new hotel rooms that have entered the marketplace since the start of 2000.

"We have to note that those extra rooms really do skew the results in the equation. While a six-month occupancy rate of 76 percent is the lowest percentage since 1995, the total number of occupied rooms for the period is similar to that of 1999, thus reflecting the increased supply," said Fox.

Data released last week by the city's convention and visitors bureau--known as NYC & Company--revealed that a million fewer tourists than expected visited the city last year. This news came as no surprise to hotel executives, who have already seen a decline in business travelers. NYC & Company also reported that visits by tourists and business travelers jumped in 1999 by 11 percent while last year that increase was only 2 percent, less than the bureau had predicted.

Throwing caution to the wind, the owner of the Mercer Hotel, a 75-room boutique operation on SoHo's Prince Street, is developing two downtown hotel properties. One, to be named the Standard Hotel, will reportedly cost $25 million to build at Lafayette and Broome streets. Work is expected to begin early 2003 on the 12-story, 81,000-SF building that will have 132 rooms. The other hotel will be built at Broadway and Grand Street, and according to one hotel source it will have 187 rooms.

J.A Jones Construction Group--which announced the Standard Hotel news in the New York Times--declined to comment on either project. A Jones official said that his client was "not ready" to talk.

The manager of the Library Hotel, a recently opened boutique located on Madison Avenue near Grand Central, categorized his business as "smooth sailing," so far this summer.

"Fortunately for us, we never priced too high to begin with. What we are after is loyalty, and in this market the rates are even more important," said Craig Spitzer, who oversees the 60-room hotel that opened last August. According to Spitzer, the Library Hotel's occupancy rates have been "excellent."

Some hotel experts believe that the boutique sector is better suited to handle an economic crisis simply because their clientele tend to be ultra-wealthy. This theory was discounted by Fox, however, who believes that all levels of the hotel business have been affected. Especially so with the business traveler, as firms take a harder look at staff lodging issues. Sending a few less staffers to spend a few nights in Manhattan is fashionable now. Some CEO's are even roughing it in less spacious units beneath the penthouse suite.

"Our current estimate for the city is for an annual occupancy in the 78-79 percent range for the full calendar year. However, this will depend on the nature and breadth of the economic recovery that many are predicting," said Fox.