Hospitality Net: NYC hotels face latest COVID challenge December 27, 2021 Some 100 city hotels were forced to shut their doors due to the pandemic, and those that survived are now pushing to lower crushing property taxes, according to an industry group. Hotels were starting to bounce back in early December, as COVID-era travel restrictions began to lift, but the much-needed recovery hit a brick wall when the Omicron variant emerged and COVID cases in New York surged. Now hotels already fighting to stay afloat with crippled vacancy rates are contending with Big Apple property taxes that have soared 100% since 2008 and are double those of other major cities, one study found. “The industry was really hammered and it’s not going to be pleasant for the first quarter” because of increasing Omicron-fueled COVID cases, said Vijay Dandapani, the president of the Hotel Association of New York City, adding “at the same time we are being punitively taxed.”

Some 100 city hotels were forced to shut their doors due to the pandemic, and those that survived are now pushing to lower crushing property taxes, according to an industry group.

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January 7, 2022

The Real Deal: Shuttered Murray Hill hotel to become transitional housing January 6, 2022 3:45 PM Though New York City failed to deliver on some politicians’ and activists’ hopes to convert hotels to affordable housing, at least one shuttered hotel is set to serve as transitional housing for the homeless. The Hotel at New York City, a 117-room property in Murray Hill was sold last month by Apple Core Holdings to Prem Jyotish, Crain’s reported. The building at 161 Lexington Avenue is going to be converted into transitional housing for the homeless in partnership with the Bowery Residents’ Committee. The sale price of the hotel, which has been closed since the onset of the pandemic, is unclear. The deal comes after the city passed a severance law, requiring area hotels to either recall staff and reopen by Nov. 11 or pay 28 weeks of severance. The law provided an exception for hotel conversions. In early December, the New York Times reported that not a single hotel had been converted into permanent affordable housing since the start of the pandemic, despite the hotel industry’s struggles. Zoning and regulatory obstacles instead led some hotels to be converted into transient shelters. The Hotel Association of New York City reported almost 200 closures between May 2020 and June 2021, with nearly half still shut by mid-November. A 2020 estimate of the homeless population in New York City totaled 78,000 people, believed to be an undercount. In June, the state passed the Housing Our Neighbors with Dignity Act, allocating up to $100 million for hotels and commercial buildings to be converted into affordable housing. Additionally, new mayor Eric Adams in September proposed converting more than a thousand hotel rooms into supportive and affordable housing. In May, the state’s highest court threw out a lawsuit claiming the shuttered Park Savoy Hotel on Billionaires’ Row was unfit for housing, clearing the way for a men’s homeless shelter. The shuttered Excelsior Hotel, meanwhile, recently sold to Emmut Properties for $80 million. The hotel was once used to house the homeless, but its new owner reportedly has plans to convert the property into apartments.

Though New York City failed to deliver on some politicians’ and activists’ hopes to convert hotels to affordable housing, at least one shuttered hotel is set to serve as transitional housing for the homeless.

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January 7, 2022

Spectrum News NY1: Tourism industry takes hit as omicron variant looms large in NYC By ANNA LUCENTE STERLING January 7, 2022 5:00 AM Sammy Davis’ thriftstore tour business had a booming November — one of her best months since she resumed tours after pausing business for more than a year because of COVID-19. She hoped that the upward trend would continue through the holidays. “And then December hit — crickets, crickets, crickets,” Davis said. Davis’ business, NYC Bargain Secondhand Thriftstore Tour, which typically takes people on group tours – mostly out-of-towners – to several second-hand clothing stores, was hit hard by the winter surge of the COVID-19 virus. Davis said she went from 13 tours in November to three in December. This surge in the virus, which was fueled predominantly by the omicron variant, severely impacted New York City and its tourism industry. By mid-December, cases soared to record numbers with the positivity rate doubling within three days. Many businesses delayed or shelved altogether their return-to-work plans and thousands of airline flights were canceled, partially attributed to staff shortages. The hotel industry, which has been working toward a recovery since COVID-19 first hit the city and devastated tourism, saw its occupancy rate start to dip by the second full week of December, just weeks after news broke of the omicron variant. For the week ending Dec. 11, the occupancy rate was 81.5%, but by the end of the next week, it was 73.8%. The following week, which was Christmas weekend, it hit 62%, and New Year’s weekend saw a 65.8% rate, according to travel research firm STR. Another metric that the hotel industry looks at closely is revenue per available room, known as RevPAR. It takes the average day rate and spreads it across all the available rooms — instead of just the percentage of rooms that were occupied. At the end of the week on New Year’s Eve, the RevPAR was $185, according to the Hotel Association of New York, which was far below the anticipated $250 prior to the onslaught of omicron. “It’s a huge drop,” said Vijay Dandapani, president of the Hotel Association of New York. “And what we expected for December 31, which is the best day in the city for hotels generally in New York pre-COVID and even after COVID — we were expecting it to be the best — it was disappointing to say the least.” The $65 difference in RevPAR that week ending on Dec. 31 amounts to a loss of about $7.6 million across the city’s 117,000 hotel rooms. “That would have gone to the bottom line of all these hotels, and would have gone towards paying bills, which is simply not there,” Dandapani said. At the end of November, before people understood how quickly and severely omicron would spread, business owners in the hospitality industry were feeling optimistic. “We were climbing very well,” said John Fitzpatrick, owner of Fitzpatrick Manhattan in midtown. “We were coming back up to the 80-95 [occupancy rate].” Fitzpatrick said reservations at his hotel dropped by about 25% by the end of December. “It’s worrying, absolutely. Are we disappointed? Yes. We thought we were getting on a positive note, but I’m truthfully, very disappointed,” he said. Experts say it’s still too soon to predict what long-term impacts this might have on the recovery of the hospitality industry. “Every hotel in the city is a long distance from making profits — a very long distance — and every time you lose revenue like this, the profit element that used to be there pre-2019 is now pushed further out,” Dandapani said. Restaurants and bars were similarly impacted by the spread of the virus in December. “They were hoping at least to make some money to pay off some debt,” said Andrew Rigie, executive director of The New York City Hospitality Alliance. “And then omicron hit, and companies canceled all their holiday parties. Many people canceled reservations.” Industry executives are still holding on to a sense of optimism though as they wait and see what happens next with the virus, pointing to the adaptability of the industry. “Whenever there’s been a challenge facing us, we’ve been able attack it [like] the Key to NYC, the recent mask requirement, masking up in Broadway, vaccination requirements for restaurants and indoor venues and Broadway, and international visitors being vaccinated before they can come here,” said Chris Heywood, executive vice president of global communications at NYC & Company, the city agency that oversees tourism. And while January and February are typically slower months for the tourism industry in New York City, people are still on guard when it comes to raising expectations. “Optimism will return once we have a clear handle of the prognosis for omicron,” said Dandapani, who said we should have a better understanding of the long-term recovery outlook around March. But for people like Davis, who runs the thrifting tour business, every cancellation can have an impact on staying in business in the long-run. “I don’t know how January is gonna be,” she said. “I have two [tours] on the books, but I am apprehensive and I am emotionally and mentally prepared for those to be canceled.”

Sammy Davis’ thriftstore tour business had a booming November — one of her best months since she resumed tours after pausing business for more than a year because of COVID-19.

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January 7, 2022

Crain’s New York Business: To warm up January, 110 city hotels offer major discounts By CARA EISENPRESS January 4, 2022 2:04 PM New York City’s hotels are hoping that a substantial across-the-board discount will entice winter travelers to the city—helping make up for a chilly business climate in December. More than 100 hotels are offering a 22% discount on standard room rates from today until Feb. 13—right before Valentine’s Day. NYC & Company, the city’s marketing organization, is running the promotion. The hotels participating include the Beekman Hotel, Lotte New York Palace, the Pierre New York in Manhattan and the William Vale in Brooklyn. This is the first time that NYC & Company has put its weight behind the discount incentive and combined it with a handful of other citywide programs that will begin Jan. 18: NYC Restaurant Week, NYC Broadway Week and NYC Must-See Week. It’s all part of a coordinated effort to support and celebrate hospitality and tourism, which have been slow to recover. The hotel discount, in particular, may be an important boost for to what is traditionally a slow month, likely made slower by the resurgence of Covid-19 cases. By the time the discount is over, said Hotel Association President Vijay Dandapani, “I think we’ll be back where we were pre-omicron.” The wide-ranging offering also helps individual hotels avoid the appearance of needing to offer discounts to fill rooms—a blow to high-end brands, Dandapani said. “Generally, they don’t discount,” he said. “It’s like going to Per Se—you’re not going to get a discount there.” Despite the lower rate, services at the hotels will not be at 78% of their normal level, Dandapani said. “You get the whole thing,” he said. In some typical pre-pandemic years, average hotel room rates dropped by more than $100 between December and January, Dandapani said. Occupancy would usually fall—going from around 85% in December to less than three-quarters full in January, he said. Last year was a minor exception, as the city’s recovery began to accelerate in January 2021, with both room demand and average revenue per available room steadily climbing from the beginning of the year through July. December was also unusual. The month started off with promise. Visitors flocked to holiday offerings and Broadway shows, and they filled up hotels:The weekend of Dec. 10 had the highest occupancy of the post-March 2020 era. Almost immediately thereafter, however, would-be tourists canceled trips as Covid-19 cases increased and organizers called off performances and events. Occupancy dropped by 20 percentage points between that week and the week ending on Christmas, Dandapani said. Going into the new year, NYC & Company believes it can promote tourism through this program and ensure the safety of New Yorkers and visitors, said Fred Dixon, president and CEO of NYC & Company. “NYC Hotel Week … encourages visitors and New Yorkers to safely enjoy some of the city’s finest accommodations during a time with less crowds and more opportunity,” he said.

New York City’s hotels are hoping that a substantial across-the-board discount will entice winter travelers to the city—helping make up for a chilly business climate in December.

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January 7, 2022

Commercial Observer: Sunday Summary: Good Riddance, 2021! January 2, 2022 9:00 AM We finally waved goodbye to 2021, our second year struggling through a global pandemic. While 2021 was definitely a marked improvement over 2020 — we had vaccines and booster shots that let us, albeit briefly, return to some semblance of normalcy — we’re still not out of the woods yet. The omicron variant of COVID-19 has surged, bringing record high daily counts and forcing many companies to delay their long-awaited return-to-office. Apple has temporarily banned in-person shopping at its 11 New York City retail shops, opting instead to allow customers to pick up online orders outside the stores, because of the rise in cases. Banking giant Goldman Sachs, however, is trying to keep its employees in the office with a new Feb. 1 deadline for eligible staffers to get their vaccination booster shots. Omicron has the potential to further disrupt the city’s already reeling tourism industry by keeping visitors away from the Big Apple. Meanwhile, the Hotel Association of New York City fears property taxes could exacerbate the sector’s problems, and in a report found those taxes amounted to 30 percent of hotel revenue in 2020, an increase from the 9.4 percent they comprised in 2019. Things were looking up before omicron reared its ugly head. Manhattan recorded higher levels of office leasing in November compared to pre-pandemic levels while the amount of sublease space kept falling, a CBRE report found. And retail sales during this holiday season jumped 11 percent compared to pre-pandemic numbers in 2019. Speaking of ups and downs, the office market in Washington, D.C., experienced something of a roller coaster ride in 2021, with occupancy levels remaining relatively low at 10 to 30 percent, but still saw deals getting signed. It wasn’t all bad news Despite some of us striking a dour tone, 2021 wasn’t all bad news. There were plenty of deals to raise a glass to. Commercial Observer rounded up the top office leases in both Florida and D.C. for some joyous reading to kick off the new year, along with the largest multifamily deals in South Florida. And, even as real estate firms were getting ready to celebrate the ball drop, they still made sure to put ink to paper for some last-minute 2021 deals. The Durst Organization landed a $127.5 million refinancing for its newly constructed multifamily complex in Astoria, Queens, 10 Hallets Point, from Signature Bank. And Taconic Partners and Nuveen Real Estate ventured to the land of Bruce Springsteen and the Jersey Devil to pick up a warehouse and distribution facility at 1 Cory Road in Morristown, N.J., in a $55 million all-cash purchase. It marked Taconic’s first foray into the industrial sector. Turning our attention to warmer climates, Manhattan jeweler Mish Tworkowski closed his longtime Bond Street shop to make a move to ritzy Palm Beach, Fla. And a Los Angeles court ruled in favor of the city’s Exposition Corridor Transit Neighborhood Plan that would allow about 6,000 new multifamily and condominium units along the Metro Expo Line on L.A.’s Westside. Ring in 2022 with some Q&A’s What better way to get over the New Year hangovers than hearing from some of the experts in the field? CO’s got you covered in that respect. Steve Giralt, the CEO and co-founder of production company The Garage, dished about why he and other creative tenants have flocked to Industry City in Sunset Park, Brooklyn, while Chris Burnham, principal of brokerage KLNB, talked about the state of retail in the nation’s capital region last year. Cheers to 2022!

We finally waved goodbye to 2021, our second year struggling through a global pandemic.

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January 7, 2022

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