Jones Lang LaSalle
Long-Term Lodging Finds a Foothold
By ALISON GREGOR
ALTHOUGH extended-stay hotels have been around for a while in most parts of the country, they have yet to really catch on in New York City.
A handful of independent hotels provide long-term lodging, but there are only two extended-stay hotels affiliated with national brands: Extended Stay America near LaGuardia Airport in Queens, which opened in 2001, and Residence Inn by Marriott in Manhattan at 1033 Sixth Avenue, near 38th and 39th Streets, which opened in January.
There are no immediate plans for additional branded extended-stay hotels in the city — in part because of the high costs in developing such properties — yet some lodging experts say the demand is there. "There's a very significant opportunity here to create an extended-stay upscale product because it really is a completely underserved market," said Mark Gordon, principal and managing director of the lodging group at the investment banking firm Sonnenblick-Goldman.
New York, of course, has its share of guests who stay for weeks or months at a time, including business travelers; visitors from abroad who are in town for the opera season or other cultural amenities; and film crews on location. Why, then, aren't more hotels offering long-term lodging for them?
There are significant challenges to developing extended-stay hotels in New York, experts say. Typically, extended-stay hotels trade the higher room rates they could charge at peak times for a steadier and higher occupancy rate. Prices for long-term visitors are often discounted as much as 30 percent. But in a market like New York, where shorter-term visitors often pay $200 or more a night, hotel operators may be tempted to hold out for that type of guest.
Another reason is that space in New York is at a premium, and long-term guests usually require more of it than those staying a single night. It is no coincidence that both the Extended Stay America and the Residence Inn by Marriott favor smaller studio spaces over sprawling suites, which are more typical of suburban extended-stay hotels. Also, New York City guests tend to demand around-the-clock services, experts say, making it hard to limit costs.
Some hotel operators have actually pulled out of the extended-stay business in Manhattan. Affinia Hotels and the Benjamin, part of a string of nine luxury inns configured for suites, were marketed for many years for long-term guests. No longer.
"We found that many of our customers were looking for more service," said John Moser, chief marketing officer for the Affinia hotel chain.
Extended-stay hotels began appearing in the late 1970's in suburban areas, where hotel companies sought to carve out a niche in a competitive market by seeking out long-term guests.
In Manhattan, many of the independent hotels offering luxury accommodations that bill themselves as extended-stay places were developed out of a condominium boom in the 1980's. Often the hotels are classified as corporate apartments and require 30-night minimum stay, a standard that permits lodging to be developed in areas where zoning codes might otherwise prohibit it.
The Phillips Club at Lincoln Square, at 155 West 66th Street, constructed as part of a mixed-use development at Lincoln Center, is one such hotel. The Phillips Club offers luxury units with full kitchens, marble bathrooms and entertainment centers, along with a variety of services like housekeeping and laundry and a parking garage. The rate on a studio is up to $7,200 a month and a three-bedroom is as much as $30,000.
About 70 percent of guests are corporate travelers. While there is a lot of that business in New York City, Pamela Malkani, a principal of the hospitality division at Millennium Partners, which built the club in 1996, said she did not anticipate a rush to develop other extended-stay hotels in the city. "I don't know that it makes sense for someone to construct an extended-stay business in Midtown Manhattan today, with the high cost of real estate and construction," she said.
The two branded extended-stay hotels now in New York also cater to short-term guests. At the Residence Inn by Marriott, only about 30 percent of the lodgers stay five or more nights, and the rest are short-term guests who pay more, said the hotel manager, Foiz Ahmed, of Interstate Hotels and Resorts, which runs the hotel. The operators have put together a marketing campaign aimed at increasing that level to 40 percent by year's end, he said.
At Extended Stay America in Queens, the ratio is 70 percent long-term guests and 30 percent short-term, which is fairly consistent for the brand across the country, Tim Groves, executive vice president for sales and marketing at Extended Stay Hotels, said. He says many of the guests at the Queens hotel are nurses and other medical professionals who commute to hospitals in Manhattan, a result of some hospitals' outsourcing of medical professionals.
The hotel's studio suites offer basic accommodations, including efficiency kitchens and limited housekeeping services, starting at $139.99 a night.
The Residence Inn New York Manhattan/Times Square, meanwhile, offers more upscale services in its suites, including daily housekeeping and a concierge, Mr. Ahmed said. "Whether you're staying six days or six months," he said, "you still need someone who's knowledgeable about New York City to be your guide."
Room rates there range from $259 to $699, depending on the season. Guests staying 30 nights or more receive a discount of around 27 percent.
Ronnie Gross, a vice president at G Holdings, which developed the Residence Inn, said limited-service hotels affiliated with national brands could survive in New York because they appealed to a range of travelers cutting across economic lines. "They're more attractive rate-wise and service-wise when times are bad, and when times are good, people are coming up from the lower tiers," he said.
Extended-stay hotels in New York City that hew to the conventional model, with larger rooms and kitchenettes, are somewhat insulated from a market downturn, said Daniel Lesser, senior managing director of the hospitality group at CB Richard Ellis. "These are laid out such that they could probably be converted to apartments, which is definitely something to consider," he said.
Long-Term Lodging Finds a Foothold
By ALISON GREGOR
ALTHOUGH extended-stay hotels have been around for a while in most parts of the country, they have yet to really catch on in New York City.
A handful of independent hotels provide long-term lodging, but there are only two extended-stay hotels affiliated with national brands: Extended Stay America near LaGuardia Airport in Queens, which opened in 2001, and Residence Inn by Marriott in Manhattan at 1033 Sixth Avenue, near 38th and 39th Streets, which opened in January.
There are no immediate plans for additional branded extended-stay hotels in the city — in part because of the high costs in developing such properties — yet some lodging experts say the demand is there. "There's a very significant opportunity here to create an extended-stay upscale product because it really is a completely underserved market," said Mark Gordon, principal and managing director of the lodging group at the investment banking firm Sonnenblick-Goldman.
New York, of course, has its share of guests who stay for weeks or months at a time, including business travelers; visitors from abroad who are in town for the opera season or other cultural amenities; and film crews on location. Why, then, aren't more hotels offering long-term lodging for them?
There are significant challenges to developing extended-stay hotels in New York, experts say. Typically, extended-stay hotels trade the higher room rates they could charge at peak times for a steadier and higher occupancy rate. Prices for long-term visitors are often discounted as much as 30 percent. But in a market like New York, where shorter-term visitors often pay $200 or more a night, hotel operators may be tempted to hold out for that type of guest.
Another reason is that space in New York is at a premium, and long-term guests usually require more of it than those staying a single night. It is no coincidence that both the Extended Stay America and the Residence Inn by Marriott favor smaller studio spaces over sprawling suites, which are more typical of suburban extended-stay hotels. Also, New York City guests tend to demand around-the-clock services, experts say, making it hard to limit costs.
Some hotel operators have actually pulled out of the extended-stay business in Manhattan. Affinia Hotels and the Benjamin, part of a string of nine luxury inns configured for suites, were marketed for many years for long-term guests. No longer.
"We found that many of our customers were looking for more service," said John Moser, chief marketing officer for the Affinia hotel chain.
Extended-stay hotels began appearing in the late 1970's in suburban areas, where hotel companies sought to carve out a niche in a competitive market by seeking out long-term guests.
In Manhattan, many of the independent hotels offering luxury accommodations that bill themselves as extended-stay places were developed out of a condominium boom in the 1980's. Often the hotels are classified as corporate apartments and require 30-night minimum stay, a standard that permits lodging to be developed in areas where zoning codes might otherwise prohibit it.
The Phillips Club at Lincoln Square, at 155 West 66th Street, constructed as part of a mixed-use development at Lincoln Center, is one such hotel. The Phillips Club offers luxury units with full kitchens, marble bathrooms and entertainment centers, along with a variety of services like housekeeping and laundry and a parking garage. The rate on a studio is up to $7,200 a month and a three-bedroom is as much as $30,000.
About 70 percent of guests are corporate travelers. While there is a lot of that business in New York City, Pamela Malkani, a principal of the hospitality division at Millennium Partners, which built the club in 1996, said she did not anticipate a rush to develop other extended-stay hotels in the city. "I don't know that it makes sense for someone to construct an extended-stay business in Midtown Manhattan today, with the high cost of real estate and construction," she said.
The two branded extended-stay hotels now in New York also cater to short-term guests. At the Residence Inn by Marriott, only about 30 percent of the lodgers stay five or more nights, and the rest are short-term guests who pay more, said the hotel manager, Foiz Ahmed, of Interstate Hotels and Resorts, which runs the hotel. The operators have put together a marketing campaign aimed at increasing that level to 40 percent by year's end, he said.
At Extended Stay America in Queens, the ratio is 70 percent long-term guests and 30 percent short-term, which is fairly consistent for the brand across the country, Tim Groves, executive vice president for sales and marketing at Extended Stay Hotels, said. He says many of the guests at the Queens hotel are nurses and other medical professionals who commute to hospitals in Manhattan, a result of some hospitals' outsourcing of medical professionals.
The hotel's studio suites offer basic accommodations, including efficiency kitchens and limited housekeeping services, starting at $139.99 a night.
The Residence Inn New York Manhattan/Times Square, meanwhile, offers more upscale services in its suites, including daily housekeeping and a concierge, Mr. Ahmed said. "Whether you're staying six days or six months," he said, "you still need someone who's knowledgeable about New York City to be your guide."
Room rates there range from $259 to $699, depending on the season. Guests staying 30 nights or more receive a discount of around 27 percent.
Ronnie Gross, a vice president at G Holdings, which developed the Residence Inn, said limited-service hotels affiliated with national brands could survive in New York because they appealed to a range of travelers cutting across economic lines. "They're more attractive rate-wise and service-wise when times are bad, and when times are good, people are coming up from the lower tiers," he said.
Extended-stay hotels in New York City that hew to the conventional model, with larger rooms and kitchenettes, are somewhat insulated from a market downturn, said Daniel Lesser, senior managing director of the hospitality group at CB Richard Ellis. "These are laid out such that they could probably be converted to apartments, which is definitely something to consider," he said.
posted by Jones Lang LaSalle NJ News Blog at 10:24 AM
<< Home