NEW YORK—The strength of the Manhattan hotel market is creating a ripple effect for hotels in other New York City boroughs and in nearby suburbs with easy access to the city.
With New York City achieving Mayor Michael Bloomberg’s goal of 50 million visitors in 2011, hoteliers in outlying areas see opportunities to pick off chunks of that massive market to improve their own performance levels.
Manhattan’s hotel market is extremely healthy and data from HotelNewsNow.com’s parent company STR also shows strength in the boroughs and suburbs. The boroughs—with most of the hotels in Brooklyn and Queens—did see a slight occupancy dip in 2011 (76% to 75.2%); however, rates were up 5.2% and revenue per available room was up 4.1%. The nearby Jersey City/Secaucus market in New Jersey saw an occupancy increase of 2.2% to 74.1%; average daily rate surged 7.3% to US$142; and RevPAR was up 9.6% to US$105.
Meantime, the Rockland/Westchester counties (north of Manhattan), showed RevPAR growth of 7.8%, while Long Island saw a RevPAR increase of 7.6%.
“Occupancies in Manhattan are substantially back to where they were before the recession,” said John Fox, senior VP for PKF Consulting in New York. “The boroughs are definitely enjoying overflow and it’s often a price play. It’s not so much question of availability; it’s availability with rate differential.”
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John Magnifico, GM at Newark Liberty Airport Marriott
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Some suburbs are in a better situation because of an ease of transportation into Manhattan. “You see the suburbs right across from the bridges and tunnels like Fort Lee, New Jersey, that do the best business,” Fox said. “In Westchester, there is not a lot of product until you get pretty far north and not so close to Manhattan.”
“There is a direct correlation between the business volumes in Manhattan and the volumes in nearby boroughs and suburbs,” added David Keys, regional VP of sales and marketing for Hilton Worldwide. “We know from our guests and from looking at the statistics that as occupancies in New York get higher there are more requests to stay nearby.”
Outliers capitalize
One nearby city that has leapt on the Manhattan surge is Newark, New Jersey—a large city in its own right but close to Manhattan with rapid access by mass transit.
“Guests staying at 4- and 5-star hotels in Newark pay about half of what they would to stay in New York City,” said Miles Berger, chairman and CEO of The Berger Corporation, a Newark-based developer that owns the Best Western Robert Treat Hotel in Newark and a Ramada Inn in Jersey City.
“We have seen an influx of New York City visitors—especially international travelers—staying at the Robert Treat,” Berger said. “While they may initially have been motivated by a recession-based drive toward savings, the trend has continued to gain momentum as the recovery takes hold.”
To maximize its New York runoff, the Robert Treat has intensified its concierge services to provide transportation to the train station. It also offers New York City maps and brochures, and helps guests get tickets to theater and events in the Big Apple.
“It’s a two-block walk to the train station and then 17 minutes into New York,” Berger said. “We tell guests it takes the same amount of time to get to some parts of Manhattan as it does to get to midtown Manhattan from uptown.”
John Magnifico, GM of the 591-room Newark Liberty Airport Marriott, said the property—with 18,000 square feet of meeting space—is positioned as an alternative meeting venue to New York. “When groups fly into Newark and stay with us, they can enjoy real savings as far as transportation,” he said.
In fact, the demand for meetings has grown so much the hotel is adding an 8,000-square-foot ballroom.
“We have definitely seen the impact of Manhattan’s strength,” Magnifico said. “We see compression from New York City as the economy has picked up.”
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Jeff Plamondon, GM at Renaissance Newark Airport Hotel
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At the Renaissance Newark Airport Hotel, Jeff Plamondon, GM, said: “We have absolutely seen an impact from Manhattan’s strength. Guardian Life Insurance (Company of America), which always met in Manhattan, recently chose us for a meeting. It meant 200 roomnights for us plus the meetings and breakouts.”
Influx of international groups
According to Keys, The Hilton at Newark Airport has a targeted and direct sales effort against the international tour market. “International tour companies and travel agencies are looking for alternatives when Manhattan gets very tight,” he said.
“As many international travelers land in Newark as at Kennedy and LaGuardia airports, so it’s easy for them to stay with us,” Berger said. “We have large groups from Germany, Japan and Brazil, as well as China. And they have buses to take them to New York.”
A relationship with a Chinese tour operator resulted in 10,000 booked roomnights at the Renaissance in Newark, Plamondon said.
And there are other targetable markets. Plamondon said his hotel does a lot of business with Royal Caribbean.
“We pick up 4,000 or 5,000 people a year who are either leaving the next day from New York or Bayonne (a nearby city in New Jersey). These are mostly European passengers.”
