Sky high: Fewer rooms,
rising demand mean
more expensive beds.
A study by New York City-based consultancy
PricewaterhouseCoopers predicts record hotel prices for the Big
Apple, which could make it more difficult for groups to afford the
city. Average room rates will continue to rise over the next
two years, to $223.65 in 2005 and $244.79 in 2006, a growth rate
faster than in any of the other top-25 U.S. hotel markets,
according to the study, released this past February.
“When you’re running occupancy levels in the mid-80s, there are
very few valleys and a lot of peaks,” said Cheryl Boyer, a
consultant for PwC’s leisure practice.
Some sources believe the hikes will have little impact on
Manhattan. “Everybody knows when you walk in the door that New York
is an expensive city,” said Gary Sims, general manager of the two
Sheratons in Midtown.
Yet the city’s prices already are prohibitive for many groups.
Peter Hanley, president of Arlington, Va.-based meeting planning
company PlanNet, said high room rates have forced several of his
clients to move their meetings to less expensive cities.
For those willing to pay the price, finding room blocks still
can be problematic, according to Tim McGuinness, vice president of
sales and convention center expansion at NYC & Company, the
city’s convention and visitors bureau. Lead times have grown, he
noted, as planners struggle to find adequate space in a hotel
market that draws large numbers of individual travelers.
“Even when hotel rates are low, we still have the problem of
getting groups in here,” McGuinness said, adding, “It’s fairly
eye-opening to see the annual business we have to turn away because
we just don’t have the space.”
That particular problem won’t be fixed anytime soon. Only one
major hotel is planned, while the city is losing rooms in droves.
The new property, near the planned expansion of the Jacob K. Javits
Convention Center, won’t open before 2010. Meanwhile, a dozen
closings have occurred over the past 15 months due to condominium
conversions, including the fabled Plaza hotel, which plans to make
condos of 457 of its 805 rooms.
New York’s city council introduced a bill to prevent hotel
owners from converting more than 20 percent of their rooms to
condos, except when able to demonstrate financial hardship. The
Hotel Association of New York City opposed the measure, claiming it
“will have a negative impact on the development of new hotels and
hotel jobs in the future.”