Last year it became clear that the ever-increasing hotel development that is a part of New York's financial ecosystem has now fully spilled into Brooklyn after ambitions for construction grew too large for Manhattan. No longer constrained to the island, development has continued to pick up pace, but is it too much too soon?
According to Bloomberg, New York's seemingly limitless demand figures may not extend to Brooklyn. At least 32 hotels are planned or under construction in the borough, raising questions about occupancy figures once doors start opening. David Loeb, an analyst at Robert W. Baird & Co., told Bloomberg that the new supply could lead to a lot of empty rooms if interest in the "trendy" borough wanes.
"If you are a stand-alone, unaffiliated hotel, I am doubtful of your success,” Bruce Ford, SVP and director of global business development at research firm Lodging Econometrics told Bloomberg. “It’s important to not confuse Brooklyn with Times Square."
What's telling is that Hersha Hospitality Trust, owner of 17 New York hotels, is not in the market for new properties. Compared to Brooklyn's 32 upcoming hotels, Manhattan's 95 seems astronomical. Increased construction, the lack of diversified demand and perhaps the availability of Airbnb rooms add uncertainty about the future of the city's occupancy numbers.
STR data show that New York's guestroom count increased 21 percent over the last five years, while the average hotel occupancy rate in Brooklyn fell 1 percent in the first five months of 2015 (reaching 76.8 percent). Meanwhile, average room rates dropped nearly 3 percent to $155.71. Comparatively, Manhattan's occupancy rate dropped 1.4 percent (to 82.4 percent) in the same period, with rates falling 3.3. percent to $255.60 per night.
Earlier this week Hotel Management covered the opening of the Wyndham Hotel Group's fourth Wyndham Garden property in the city, a 70-room hotel in Brooklyn's Sunset Park neighborhood. Two other Wyndham Garden hotels can be found in Manhattan, and another two in Queens.