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- Hotel Transactions - Including New Hotels and Developments Ernst & Young LLP |
January, 2000 - In 1999, Manhattan experienced nine major
transactions (encompassing ten hotels) for a total consideration of $1.01
billion or $280,000 per room (excluding the Regal UN Plaza due to an undisclosed
price) versus 1998 in which four major transactions (comprising nine hotels)
were completed for approximately $607 million or $241,000 per room. Although
the number of lodging transactions did not approach the volume of 1996
or 1997, it is clear that capital was more readily available in 1999 than
in 1998. Moreover, these sales included some of Manhattan�s most
prominent hotels. Similar to last year, buyers included hotel companies
and private investment funds.
Asset Sales In January, the 597-room Essex House was sold by Japan Airlines to Strategic
Hotel Capital for $250 million or
Airlines to Strategic Hotel Capital for $250 million or $419,000 per room. The property is operated by Starwood Hotels and Resorts Worldwide and is now called the Essex House, a Westin Hotel. A $75 million renovation has been completed to restore the property to luxury standards. In February, John Hancock Mutual Life sold the 188-room Doral Park Avenue to Hayman Company for $45.1 million or $239,000 per room. The insurance company sold the property in February as part of its effort to sell its real estate holdings. In 1997, the insurance company was negotiating to sell the hotel to Starwood Hotels & Resorts but the transaction never closed. The hotel is now independently managed by Tishman Hotel Corporation and recently completed a $4.5 million upgrade to the public areas and guestrooms. In March, the 370-room Four Seasons was sold by Lai Sun Hotels International to 57 BB Property LLC investment group, which is led by Ty Warner, for $275 million or an astounding $743,000 per room. Ty Warner, a first time hotelier, is the owner of the Beanie Baby empire. In 1996, Lai Sun Hotels International paid $191 million or $516,000 per room for the Four Seasons. In July, Starwood Hotels and Resorts Worldwide sold its leasehold position of the 208-room Westin Central Park South to Bass Hotels & Resorts for $62.5 million or $300,000 per room. The hotel has been renamed the Central Park Inter-Continental New York, and represents the second Inter-Continental hotel in Manhattan. After extensive renovations, the Central Park hotel will retain the room configuration of 208 rooms and 16 suites. Inter-Continental is the fourth brand name change for this property since 1988. Previously, the property was flagged a Ritz-Carlton (1988-1997), a Sheraton, Luxury Collection (1997-1998) and a Westin (1998-1999). Also in July, the 700-room Hotel Lexington was sold by TAJ Hotels to Oxford Capital Partners Inc., Goldman Sachs & Co.�s Whitehall Real Estate Fund and Highgate Holdings for a reported $117 million or $167,000 per room. Highgate Holdings plans to reflag the property as the Radisson Hotel New York - East Side in mid-January 2000. A multi-million dollar renovation will include the guestrooms, corridors and public spaces. The hotel will feature four restaurants when a 200-seat entertainment and dining club opens in early 2000. In September, the leasehold interest of the 185-room Stanhope Hotel was sold by Born & Druker/Colony Capital to Hyatt Corporation for $65 million or $351,000 per room. The property has been renamed The Stanhope, a Park Hyatt Hotel. Hyatt Corporation currently owns 193 hotels worldwide, while only seventeen of those bear the exclusive Park Hyatt name. The hotel features two restaurants and a lounge, along with 2,200 square feet of meeting space. The St. Moritz hotel has been home to a number of famous personalities including Marc Chagall, Walter Winchell, and Mickey Mantle. - - - the remaining 23 floors of the hotel as a 300-room Ritz-Carlton after it undergoes a $150 million renovation. Over the years, the St. Moritz has been owned by Harry Helmsley, Donald Trump, Alan Bond, FAI Insurances, Ian Schrager Hotels LLC, and now Millennium Partners. This will be the second Ritz-Carlton developed by Millennium Partners, with the other under construction in lower Manhattan on Site 1 in Battery Park City. Finally, in December, Loews Corporation sold two of its Times Square Hotels to Hampshire Hotels & Resorts. The 367-room Howard Johnson�s Plaza and the 300-room Days Hotel both on Eighth Avenue were sold for a total of approximately $100.0 million. Hampshire Hotels & Resorts is a Manhattan based hotel chain which owns several smaller properties (primarily in the Times Square area) in Gotham including the Time Hotel. Details regarding Hampshire�s plans for the two properties has not yet been made public. Loew�s reportedly sold the properties to concentrate on operating and developing their portfolio of four- and five-star properties around the country. Mergers and Acquisitions In 1999, several lodging industry mergers and acquisitions took place which have had an impact on Manhattan hotels. In July, Accor, a French lodging company which owns the Sofitel, Novotel, Mercure, Ibis, Motel 6 and Formula 1 brands, purchased Red Roof Inns for $1.1 billion. Red Roof Inns and Motel 6 are operated under the subsidiary, Accor Economy Lodging, which is now the largest operator of economy hotels. Accor is the third largest hotel operator in the world. In December, it was reported that Accor engaged in a sale/leaseback of 145 Red Roof Inns for $500 million to two buyers, U.S. Realty Advisors and Berkshire Hathaway. Red Roof will make its entry into the Manhattan market in February 2000 with a hotel on 32nd Street and Fifth Avenue, which is currently under construction. In September, Hilton Hotel Corporation announced their plans to purchase Promus Hotels. Approximately 1,700 hotels including Hiltons, Doubletrees, Embassy Suites, Hampton Inns, Homewood Suites and Red Lions will be included under the Hilton umbrella. In November, the companies� shareholders approved the buyout. By the beginning of December, the acquisition of Promus for $3.7 billion was completed. This may effect the branding of existing and proposed hotels as well as those under construction in Manhattan and throughout the United States. By mid-November, Millennium and Copthorne had agreed to purchase Regal Hotels International�s U.S. hotels including the 427-room Regal U.N. Plaza (anticipated to be reflagged as a Millennium) in Midtown Eastside. The purchase price for the hotel has not been disclosed but the 28-hotel U.S. portfolio is expected to sell for approximately $253 million plus $387 million in debt. The company owns portions of three other Manhattan hotels, the newly expanded Millennium Broadway, the Millennium Hilton and The Plaza. Additions to the Manhattan lodging stock continued in 1999. Consistent with 1998, properties were added through several different means: ground-up construction, conversion from another real estate use or conversion from an existing lodging use. In total, 432 new rooms were added to the market due to new construction, while 1,112 rooms were added due to conversions. When the Algonquin, the hotel famed for its witty literary patronage, opened in 1902 it was called the Puritan Hotel. The hotel was later renamed the Algonquin, referring to the neighborhood�s �first and strongest people.� - - - significantly larger than the existing rooms at the property. In addition, the Premier features a lounge for the exclusive use of its guests. The addition brought the total number of rooms at the property to 752. Two conversions were completed in April as the Benjamin Hotel and On
the Avenue Hotel opened. The 209-room Benjamin Hotel was formerly the Hotel
Beverly. Manhattan East Suites Hotels purchased the Hotel Beverly at the
end of 1997 for $38 million. The Benjamin, Manhattan East Suites� tenth
hotel in Manhattan which primarily caters to business travelers,
The Time Hotel, formerly the Hampshire Broadway, opened in April 1999.
The 193-room hotel, owned by Hampshire Hotels & Resorts, is marketed
to a variety of travelers from corporate to entertainment and fashion professionals.
Two downtown hotels opened in the summer of 1999. The Holiday Inn Wall
Street, which opened on June 15th, was the Wall Street area�s first new
hotel in eight years. As one of the most technologically advanced hotels
in the city, the Holiday Inn planned a �techie� New Year�s Eve. Reportedly,
the hotel�s 138 rooms were anticipated to be 100 percent occupied at $450
per night by year 2000 technology troubleshooters from Wall Street firms.
The second hotel to open in the Wall Street area was the Wall Street Inn,
located on 9 South William Street, which opened its 46 rooms to the public
in July. The hotel has no restaurant or lounge, but features a continental
breakfast and workout facility for its guests.
The Shoreham�s $15 million, 92-room expansion was unveiled in late November. In addition to the greater number of rooms, the hotel has a redesigned lobby and lounge, a new meeting room, and a new second eatery called The Shoreham Restaurant and Bar. The 176-room hotel, which is owned by Credit Suisse First Boston and managed by the Boutique Hotel Group, is one of five hotels in its Manhattan portfolio. The Doral Court and Doral Tuscany became the W Court and W Tuscany in late November of this year. The two hotels were purchased in 1996 by the W Hotels division of Starwood Hotels Resorts Worldwide, Inc. Both hotels underwent room renovations and public space reconfiguring. The W Court will feature the �Icon New York� restaurant, the latest creation of famed restaurateur Drew Nierporent, and the WETBAR, similar to the Whiskey Bar at the 722-room W New York. The W brand currently has three hotels in the Manhattan market with a total of 1,042 guestrooms. The 77-room Hotel Giraffe had a soft opening in December 1999 encompassing four guestroom floors. The boutique hotel is anticipated to be fully operational by January 2000. Hotel Giraffe represents new construction (The Savoy was razed in order to build the new hotel). Characteristics of a giraffe can be seen throughout the hotel from the spots on the stationary to the vaulted ceilings. The hotel features a lobby lounge and breakfast/tea area. On the ground level, Merchants restaurant chain has leased 3,000 square feet and is expected to open a restaurant in the Spring of 2000. Also in December, the 144-room Regent Wall Street opened in the former Merchant�s Exchange building after undergoing an $80 million refurbishment. The hotel caters to business and leisure guests by providing business amenities including WebTV and dual telephone outlets for fax and computer use, while creating an atmosphere of an upscale residence. Currently, there are eleven significant hotel projects, comprised of approximately 3,702 rooms, under construction in Manhattan. There are also eight hotels proposed, encompassing approximately 2,420 rooms. Under Construction Two of the smallest additions to supply are anticipated to open in early 2000. The Dylan Hotel is anticipated to open in January 2000. Morris Moinian�s 108-room development is under construction at 52 East 41st Street in the former Chemist Club building. The total cost of the reconstruction of the 43,000 square foot building is approximately $30 million. The hotel�s restaurant, named RX, is expected to open in February. The 60-room Library on Madison Avenue and 41st Street is anticipated to open in February 2000. It is expected to cost approximately $9 million to complete the renovation of the 87-year old office building. The hotel, owned by Henry Kallan, will feature a ground level restaurant and second floor library. In being true to the hotel�s name, guests will be not be assigned a standard numbered room, but Dewey decimal numbered rooms which will be accessible using the guest�s �library card.� The first Manhattan Red Roof Inn is under construction on 32nd Street, west of Fifth Avenue. The 172-room hotel is anticipated to open in February 2000. The hotel, owned and managed by Apple Core Hotels, will feature a fitness center, business center and an enclosed rooftop bar. The economy hotel is being converted from an office building. Red Roof Inns was bought by Accor S.A. in August 1998 and is now operated by Accor Economy Lodging. The Astor family is behind the development of numerous hotels in the 19th and 20th centuries including the Astor House, Waldorf=Astoria, St. Regis, Astor and Knickerbocker hotels. - - -
Philip Pilevsky�s Bryant Park Hotel is under construction across from Bryant Park. Pilevsky is rehabilitating and renovating the interior of the landmarked American Radiator Building, located at 40 West 40th Street between Fifth and Sixth Avenues. The Bryant Park Hotel will comprise approximately 130 rooms. The hotel is expected to open in Spring 2000. The Hotel Sofitel is under construction at West 44th Street between Fifth and Sixth Avenues. Accor North America�s $90 million hotel will comprise 400 rooms, with 52 suites housed within a 30-story curved tower of limestone and glass, flanked by two rectangular 20-story wings. When the hotel opens in June 2000, it will be the Paris-based Sofitel�s first property in New York. The former Planet Hollywood Hotel is under construction at Broadway and 47th Street, and is anticipated to be opened by July 2000. Since Planet Hollywood filed for bankruptcy in the fall of this year, the branding and management of the property has not yet been determined although construction has continued. The developer expects to have an operator and flag in place by early January 2000. The yet-to-be-named hotel will feature 550 rooms, 20,000 square feet of meeting space, a restaurant and lounge in addition to ground-level retail space. Ian Schrager and Northstar Capital took control in 1997 of the building on 356 West 58th Street and the adjacent building on West 58th Street near Ninth Avenue and are currently developing the Henry Hudson Hotel. Once completed, the hotel will be the largest of Schrager�s Manhattan hotels. Schrager plans to convert the property into a 860-room hotel that would cater to the more rate-sensitive traveler. By October 1999, Ian Schrager Hotels had obtained $110 million in financing to complete the renovation. The hotel is scheduled for completion by September 2000. TriBeCa�s first major hotel, the $35 million TriBeCa Grand, is currently under construction and is anticipated to open in Summer 2000. The hotel, developed by Hartz Mountain Industries Inc., will be bounded by Sixth Avenue and White, Walker and Church Streets. The site is several blocks south of its sister property, the trend-setting SoHo Grand Hotel, which altered the Downtown hotel scene upon opening three years ago. In addition to the 203 rooms, each averaging 330 square feet, the hotel is expected to offer a business center, fitness center, restaurant, bar/lounge and a 100-seat screening room. Ritz-Carlton, located on Site 1 of Battery Park City, recently commenced construction of a 311-room hotel. It is anticipated to be opened by Summer 2001. The $175 million mixed-use project, developed by Millennium Partners, will include the New York Skyscraper Museum, residential condominiums and the hotel. The terms �ritzy� and �puttin� on the Ritz� came from the former Ritz-Carlton on Madison Avenue between 46th and 47th Streets which was razed in 1957. - - - A new 140-room extended-stay hotel is proposed in a residential building located on East 38th Street between First and Second Avenues. Developers Alan Ballinger and Craig Stone of Extended Stay Inc., anticipate an early 2000 opening. The 100,000 square foot hotel will be marketed to executives in need of temporary accommodations (minimum of thirty days). In 1998, Doral Hotels (the brand was purchased by MeriStar Hotels & Resorts Inc., in January 1999) was contracted to be the hotel�s management company. Cornerstone Real Estate Advisors has proposed to convert a manufacturing loft into a boutique hotel at 130 West 46th Street. The group expects to add five floors to the existing building to create the 200-room hotel. The project is anticipated to be complete by April 2000. The Pomeranc Group of New Jersey has proposed to develop a luxury boutique hotel, located at 60 Thompson between Broome and Spring Streets in SoHo. The 100-room hotel is anticipated to be completed by Spring 2000. As of January 1999, the Pomeranc Group had obtained $18 million in financing. The developers have hired designers Aero Studios and architect Stephen Jacobs. Anticipated to open in December 2000, the W Hotel on Park Avenue and 17th Street will be the fourth W Hotel in Manhattan. The 270-room hotel will be converted from the Guardian Life Building which has been located on the site since 1911. The conversion, which will be overseen by the Related Companies and Starwood Hotels is expected to cost approximately $60 million. Retail space has not been leased yet, but well-known restaurateurs and bar owners have been cited to be interested in the project. If the Meat Packing district is the up and coming hotel market, then Broadway Management Corporation and Madison Equities Corporation will be the year�s visionaries as the 200-room Greenwich Village Hotel opens in January 2001. The $52 million project is the first in the area but is not expected to be alone for long as other developers have been searching for available sites to build upon. The Tishman Hotel Corporation has plans to build an 860-room Westin hotel, to be managed by Starwood Hotels and Resorts, as part of its E Walk phase two development. The hotel is slated to open in late 2001. The Related Companies plans to develop a $200 million five-star luxury hotel as part of the Columbus Centre mixed-use project to be located on the current Coliseum site, bounded by 60th Street to the north, 59th Street to the south, Columbus Circle to the east and Columbus Avenue to the west. The 250-room hotel, which is anticipated to be completed by late 2003, will be managed by Mandarin Oriental. As of mid-September, Hardin Capital was in negotiations to purchase a site on 40th Street between Fifth and Sixth Avenues. The hotel is anticipated to have between 400 and 450 rooms and may be branded either as a Hilton Garden Inn, Embassy Suites or Hampton Inn. |
E&Y Kenneth Leventhal Real Estate Group a business unit of Ernst & Young LLP M. Chase Burritt, National Director 1211 Avenue of the Americas New York, New York, 10036 212-773-4900 http://www.ey.com |
Also See: | Manhattan Lodging Report - Market Segment Analysis / January 2000 / Ernst & Young LLP |
Manhattan Lodging Market Sees Strong Room Demand and Higher Room Rates Despite First Decline in Overall Occupancy Since 1991 / E&Y Kenneth Leventhal Real Estate Group / Jan 2000 | |
E&YKL Study Says Lodging Industry Fundamental Stay Healthy Despite Stagnant Occupancy Rate, Leading to Moderate 1999 Growth / Dec 1998 |