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News for the Hospitality Executive

They're Still Expensive, But New York City Hotels Are
 Cutting Prices Well Below 2008's Average of $310
By Eric Gershon, The Hartford Courant, Conn.McClatchy-Tribune Regional News

April 19, 2009 - You won't actually find a diamond as big as The Ritz in New York City -- that's a fiction of F. Scott Fitzgerald. But these days you can get a room at a Manhattan Ritz-Carlton hotel for less than $300.

Same goes for The Waldorf Astoria at 50th Street and Park Avenue, which has been advertising rooms from $279.

Throughout Manhattan, the nation's most expensive hotel market, luxury lodgings and everyday hotels alike are offering rates well below last year's average of $310.

"Everybody's rolling out the red carpet," said John Fitzpatrick, chief executive for North America of Fitzpatrick Hotels and chairman of the Hotel Association of New York City.

The recession has hit the hospitality industry hard, and New York's hotels -- like those in big cities nationwide -- are cutting prices and deals to attract business as people travel less for work and leisure alike.

"We've seen some hotels that had some advertised rates at or below $100," said John A. Fox, who runs the Manhattan office of PKF Consulting, a hotel industry research firm. "There are a lot of hotels advertising rates in the $100 to $200 range, including some very good hotels. Brand names."

The average cost last year for a Manhattan hotel room was $310.65. As recently as last September -- peak season -- the average room rate was more than $380.

Falling demand has driven down prices.

The occupancy rate in Manhattan, which held steady at an annual average of about 85 percent for several years through 2008, even as prices rose, was 64 percent in January and February combined, down from 78 percent for those two months last year, according to PKF.

The average room rate for the first two months of 2009, usually a slow period in New York, fell 14.5 percent compared with a year earlier, to $220.70, PKF said. In February alone, the average rate fell 17.6 percent, to $216.35.

PKF reports prices based on data for 74 Manhattan hotels that account for nearly 32,000 rooms. New York City has 77,500 hotel rooms, the vast majority of them in Manhattan.

The recession has put New York hotels, still the most expensive in the country on average, in an unusual position -- angling for business.

"I think they're out there beating the bushes for everything they can get right now," Fox said. "They haven't had to be very aggressive in the past. Now they've got to be aggressive."

The legendary Waldorf-Astoria, owned by Hilton Hotels, is departing from custom to provide discounts for prepayment and free upgrades for guests who book certain suites, said Matt Zolbe, director of sales and marketing for The Waldorf-Astoria. The discounts now range from $20 to $40, he said.

Fitzpatrick's two Manhattan hotels, one near Grand Central, the other on Lexington at 57th, are offering a 10 percent discount off the daily best available rate of $179 plus tax for stays of four nights or longer. Another promotion includes certificates for discounts or services at Bloomingdale's, Sephora or other stores for all customers paying the standard rate.

The Gramercy Park Hotel, a swank Ian Schrager property, is advertising a 50 percent discount on additional nights per paid night.

This week, NYC & Co., a private nonprofit group that is the city's official tourism promoter, plans to start an extensive marketing campaign intended to draw visitors to the city.

Christopher Heywood, NYC & Co.'s vice president for travel and tourism public relations, declined to discuss details of the campaign in advance of its debut. But he said it would involve hotel deals.

"We have been working more closely with the hotels," he said. "Value is the operative word this year in a lot of the programs we're developing."

Joseph Spinnato, president of the Hotel Association of New York, which represents more than 200 hotels, said at least one marketing program would appeal to residents of nearby communities who might easily make a day trip instead of spending the night.

He described this ideal person as "the tank-of-gas-drive-in from the outer boroughs, the outer counties, upstate, the tri-state area. Connecticut, New Jersey, Pennsylvania, parts of New York. ... What we're looking to do is entice them to stay over."

PKF and other analysts expect New York's average hotel price to remain below recent norms into mid-2010 and down about 15 percent for all New York hotels this year compared with 2008.

Besides the economy, new construction may help keep prices moderate. While developers delayed or canceled some hotel projects as the recession deepened, several projects that were already underway are proceeding, and the city's supply is expected to grow by thousands through 2011. New York's supply grew by 5,000 rooms last year, according to NYC & Co.

A prominent example is The InterContinental New York Times Square, a 611-room, 34-story hotel now under construction at 8th Avenue at 44th Street. It is scheduled to open in the summer of 2010.

"Many folks who could not have afforded New York when times were booming can now experience it at a much reduced rate," Spinnato said.

Current hotel rates and deals can be found on travel websites such as,, or, or by calling the hotels directly.


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Copyright (c) 2009, The Hartford Courant, Conn.

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