By MELISSA FINE
July 31, 2023
The hotel industry is making a big post-COVID comeback in the Big Apple, thanks in a big way to the migrant crisis that is currently crushing New York City.
Current and prospective hoteliers are scrambling to pick up properties as Mayor Eric Adams’ administration contracts with more than 100 hotels to provide thousands of asylum-seekers with a place to stay.
At last week’s New York Hotel & Hospitality conference at the New York Marquis, LW Hospitality Advisors’ CEO, Daniel Lesser, noted the irony.
“Who would have thought that hotels would be perceived as a darling asset class compared to office buildings?” Lesser told Bisnow.com. “That’s what’s happening now.”
The total room inventory in the city has fallen to 118,000, compared to 144,000 before the pandemic, per the Hotel Association of New York City. Occupancy is still below 2019 levels, but the city’s average revenue per available room, the hotel industry’s leading performance metric, is higher than it was four years ago. These strong metrics mirror a national trend — last month, CBRE increased its forecast for RevPAR to nearly $98 a night nationally, a 6% jump from its previous prediction.
Hotel Association of New York City CEO Vijay Dandapani told the New York Post that the influx of migrants “has certainly helped the industry overall due to ‘compression’ brought about by hotel inventory being taken off the transient market.”
According to Dandapani, there is a “small subset of prospective and current hotel owners” who are looking at the migrant crisis as an opportunity and are considering either purchasing existing hotels or opening new ones.
Dandapani is cautiously optimistic about the industry’s future.
“If you’re an existing hotel owner operator, you’re looking good,” he told Bisnow.com. “[But] operating costs are high … in New York City, the real property taxes is the highest in the nation.”
In Manhattan, The Roosevelt Hotel, once known as “the Grand Dame of Madison Avenue,” was forced to close its doors during the pandemic “and remained mothballed until its owners reached a deal with city officials to become a so-called Humanitarian Emergency Response and Relief Center,” The Post reports.
Now migrants camp outside the 1,000-room hotel, waiting for a vacancy.
New York City “entered into an overall $275 million contract with the hotel association earlier this year that set aside 5,000 hotel rooms for migrants,” according to The Post.
It’s a deal that Dandapani vows will be honored “as long as needed.”
“We stand ready to do it as long as needed and as long as hotels voluntarily agree to serve this market,” he said, “which is the case now.”
The Holiday Inn in the Financial District is another NYC hotel that has been converted into a migrant shelter. Court records reveal its per-night room fee has nearly doubled, from $102 earlier this year to the current $190 per room it is now charging the city.
A spokesman for the mayor’s office sees it as a sign of New York’s rebounding success.
“As Mayor Adams often says, New York City isn’t coming back — it’s back,” he told The Post on Sunday.
“Tourism is rapidly returning to pre-pandemic levels — with 56 million visitors coming to New York City in 2022, 65 million expected this year, and the city consistently filling our hotels as much as any other major American city,” he explained. “At the same time, more than 93,000 asylum-seekers have come through our intake system since last spring, and we’ve opened 192 sites to provide beds and services — the vast majority being hotels. With hundreds of asylum seekers continuing to enter New York City every day, all options remain on the table as always.”
Meanwhile, Adams is continuing to beg the federal government for handouts.
“We have stepped up and led the nation, but this national crisis should not fall on cities alone to navigate,” he said last week, according to The Post. “We need a national solution here.”