CBRE's Market View for New York City reports that all major hotel metrics have shown improvement over the first half of 2012, especially in the Lower Manhattan and Times Square markets, which have exhibited year-over-year RevPAR growth of 9.
7% and 7.55%, respectively, compared with mid-year 2011. City-wide RevPAR has grown 6.95%, amid increases in supply in several neighborhoods, speaking to the city's potential to absorb new product as it comes to market.
Market demand has continued to grow in 2012 as a result of growing neighborhoods and office markets, as well as continued growth in US and international tourism. The Midtown South office market has experienced leasing velocity that has surpassed historical highs as office buildings have been acquired, renovated, and repositioned to absorb a growing technology and media industry. This influx of new tenants has bolstered commercial demand in the area. International travel has also continued to grow at record pace despite economic uncertainty in Europe and slower-than-expected growth in China. The World Trade Center area has had its impact on demand, as tourists as well as local residents have crowded the area since the opening of the National September 11 Memorial Plaza.
The most prominent buyers of hotel assets in 2012 have been foreign buyers. The Sahara Group of India, is in contract to acquire a controlling stake of the iconic Plaza Hotel and Plaza retail for US$570 million, and is also reported to be in contract to acquire the Dream Hotel Downtown. In January, HNA Property Holdings of China, acquired the Cassa Hotel for US$130 million, or US$787,879 per key, while Longham Hotels, of Hong Kong, has been actively seeking an acquisition opportunity to expand its brand into Manhattan.
In February, King and Grove Hotels, backed by Joseph Chetrit, has also been an active buyer, acquiring the Hotel Williamsburg, in Brooklyn, for US$32,350,000 or US$505,468 per key, and acquired the Hotel Lola in July for US$116 million, or US$420,290 per key. King and Grove also purchased the Hotel Chelsea in May 2011 for US$80 million.
More recently, Strategic Hotels and Resorts acquired the Jumeirah Essex House at Central Park South for a reported US$362.5 million or US$699,807 per key for the 518-room property, with plans to rebrand the hotel as a JW Marriott at a cost of approximately US$18.3 million, bringing the all-in acquisition price to US$380.8 million.
New York City hotels hosted a record number of visitors in 2010 and 2011, surpassing all previous high watermarks in both years. Tourism is expected to continue to grow through 2012 and beyond, with the city's goal to reach 55 million visitors by 2015. The Manhattan hotel market has exhibited strong growth in demand and ADR over the course of 2012. City-wide RevPAR increased year-over-year amid significant increases in supply and continued uncertainty across the US and international travel remains positive.
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