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A Red Roof Inn Room for $319; Budget Hotels Entering
New York City in Record Numbers

By Elizabeth Sanger, Newsday, Melville, N.Y.
Knight Ridder/Tribune Business News

Dec. 9, 2004 - From Wall Street to Harlem, Manhattan is becoming a hotbed of no-frills hotels.

The city's glitzy four-star hideaways generate plenty of publicity, with celebrity check-ins, swanky suites and fancy restaurants. But quietly and forcefully, budget-minded motels, long the staple of airports, interstates and small towns, are bunking down in Manhattan in record numbers.

Hampton Inn has 1,300 destinations worldwide but only acquired its first Manhattan location -- and tallest hotel -- 16 months ago. Three more are expected to open within months.

Based on its success with the 158-room Four Points by Sheraton in Chelsea that opened in March, developers recently broke ground for a Four Points SoHo whose 150 rooms will feature "industrial chic" decor and Hudson River views.

There's more. Courtyard by Marriott, with two locations in Manhattan, plans to plant two more flags, on the Upper East Side and on 125th Street, while Holiday Inn Express is eyeing the West 40s.

They are joining more established chains, including Comfort Inn, La Quinta, Howard Johnson and Super 8, not to mention scores of smaller, independent hotels which have been hosting penny-pinching travelers for years. Many of the budget lodgings are renovated former independent hotels or other types of buildings.

Why are there more rooms at downmarket inns? It's much less expensive to build a limited service hotel than an opulent Mandarin Oriental, said John Fox, senior vice president of PKF Consulting, which tracks the industry. Moreover, lower-priced chains like the cachet of having a Manhattan address, and they can charge rates double the nationwide average, notes Jan Freitag, a spokesman at Smith Travel Research in Hendersonville, Tenn. "There's no dearth of demand for reasonably priced rooms," Fox said.

Reasonable is all relative. Don't expect $49 bargains. Hampton Inn wondered whether travelers who paid $79 in Atlanta would fork over $179 in Manhattan, said a vice president, Phil Cordell. It found that "customers are willing to pay a higher rate if it represents value in the market," he said.

At Apple Core Hotels, which owns five lower-end franchises in Manhattan, the average rate is $139. During slow winter months rooms at its Red Roof Inn go for as little as $89. This weekend Red Roof will get $319, because early December is one of the busiest tourism seasons, said general manager Rafeeq Mohamed.

As occupancy climbs, sites that once seemed too out of the way are more viable, Fox said. "Location is not as important if you do it at the right price."

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