Going up: More new hotels dot New York's cityscape

NEW YORK — If you build it, they will come.

That appears to be the mantra of myriad hotel brands and companies that have their sights set on New York, which has more hotels in development than any other city in the USA.

From Midtown Manhattan to Wall Street and New York's outer boroughs, new hotels are being built, and others are getting multimillion dollar makeovers to accommodate a flood of visitors expected to reach a record 55.8 million this year.

New York City "is the most important gateway market for foreign and domestic investors," says Jan Freitag, senior vice president of hotel data company STR. "And the performance has been solid."

A hotel building boom is happening across the country. Construction spending for lodging projects was up 16% in October from a year earlier, according to the latest Census Bureau data.

New York is at the forefront. Its room supply in September was almost 6% higher than it was the previous year, the largest growth of any city.

By the end of 2014, New York is expected to have 102,000 hotel rooms. The roughly 30,000 rooms added over the past seven years is almost as many as the total number of rooms currently available in another top tourist destination, San Francisco.

"There is a huge confidence in the (New York City) market," says Christopher Heywood, spokesman for NYC & Company, the city's marketing and tourism group. "That's why brands continue to establish a presence here."

Visitors to New York shouldn't count on lots of bargains, though, just because so many new rooms are filling the pipeline. There's a very slight chance that room rates, on average, might stay flat or decline, Freitag says, partly because many of the hotels being built in outer boroughs such as Queens are "limited service," meaning they have no ballroom and don't offer three meals a day. New York is, and will likely remain, one of the most expensive markets in the U.S.

New York City hotels tend to stay full, averaging about 85% occupancy through much of this year, according to STR. And it's that kind of business that makes the city a magnet for hotel investors, says Laurens Zieren, general manager of the New York Hilton Midtown.

"It's one of the busiest markets in the world," says Zieren. "As long as there's space, there will be new hotels."

This year, Zieren says, the New York Hilton Midtown has completed renovating 187 guest rooms and 41 suites. The property's food and beverage offering has also been updated, allowing guests to grab a meal before rushing out the door.

"It's catering to what today's guest is asking for," he says. "It could be a quick sandwich before they run into a meeting or a sandwich they eat while traveling to other places. ... Whether a tourist or business person, there are very few people who want to sit down for an hour for lunch or dinner."

The hotel, which turned 50 last year, is a midtown stalwart. But that long-established presence is also a key reason why it needs to innovate, as new hotels pop up on the cityscape to try and grab a slice of the lucrative tourism market.

The Strand, a boutique hotel in the fashion district, is only 5 years old. But it's already upgrading its food and beverage experience, including offering themed, specialty cocktails such as the "Needles and Pins" — made with cucumber vodka, ginger syrup and egg white among other ingredients — to distinguish itself from newer hotels popping up nearby.

"We brought a lot of attention to what the potential was for this neighborhood and it doesn't take long for people to jump on (board)," says Tom Glassie, managing director of Atlantic Stars Hotels, the Strand's owner. "It's unbelievable how many hotels are going up within 100 yards now of the property. We'll probably have 10 in another year and a half, when we were the only one."

The Artezen is an 89-room boutique hotel expected to open in Manhattan's financial district by the start of 2016. Less than two blocks from the new Freedom Tower, its owners believe that it will be able to tap into the mix of business people and visitors flocking to the revived neighborhood.

"In the past it was just business, but the way things have changed downtown, I think we'll get a great mix of business, and leisure," says Philip Loria, co-owner of the new hotel. It's "the perfect time."

All the activity in New York may make some hoteliers forget that some months that are slower than others, says Larry Korman, president of AKA, whose hotels have gotten a range of upgrades, from two new penthouse floors at the AKA Central Park, to a renovated lobby at the AKA Sutton Place.

"I think people adding hotels don't anticipate the lull in the market in the first quarter," Korman says. "A lot of people coming here just assume it's a 12-month market like London or Los Angeles. It's not."

But even if business isn't quite as robust year-round, Korman says operating a hotel in New York City is still likely to be a good bet. "There's still (only) one New York City in the United States," he says.