New York Travel Is Down. Plenty of Hotels Are Opening Anyway.


New hotels in New York City are starting to open with the summer travel season fast approaching, testing a market that has been recovering but still faces serious challenges from Covid-19. Data firm STR is projecting that 78 hotels with more than 13,000 rooms combined will open in 2021, the […]

New hotels in New York City are starting to open with the summer travel season fast approaching, testing a market that has been recovering but still faces serious challenges from Covid-19.

Data firm STR is projecting that 78 hotels with more than 13,000 rooms combined will open in 2021, the largest year for deliveries in recent memory. While many suffered construction delays during the pandemic and might hold back on their openings, dozens of others are still on track to open this year or early next year.

Arlo Hotels is planning to open an upscale hotel near Hudson Yards this spring, which with 489 rooms will be one of the largest lodging properties scheduled to open this year. Properties already opened this year include the 74-room Brooklyn Vybe Hotel and 33-room Baltic Hotel, both in Brooklyn, and the 114-room ModernHaus SoHo in what used to be the James Hotel.

“New York was, is and always will be in the forefront of developers’ minds,” said

Jan Freitag,

national director of hospitality analytics at CoStar Group Inc.

Even in the best of times, launching a new hotel in the largest U.S. lodging market can be fraught. At the start of 2020, New York City’s 138,000 hotel rooms oversupplied the market, and it was starting to pressure room rates. Hotel labor costs are also among the highest in the country.

But those issues now look relatively minor after Covid-19’s devastating effect on tourism and travel. Hotel-room occupancy for New York was 53.8% for the week ended May 1, according to STR. That was up slightly compared with the previous week, but trails the national average of 57.1% and is well below the city’s 89.8% rate for that week in 2019, STR said.

Staff has been hard to recruit, in part because new hotels are competing with scores that closed during the pandemic and are now reopening. About 146 properties with 27,998 rooms have reopened, according to STR. Another 115 with 36,830 rooms are temporarily closed, while six have closed permanently.

New York City, like other major markets, has seen some improvement on the leisure-travel side as the vaccine rollout continues. But corporate travel and group business remain subdued and could remain so for much of the year, analysts say.

The Arlo Midtown’s bar and lounge.


Chase Daniel

Less than 37 million tourists are expected to visit the city this year, compared with a record 66.6 million in 2019, according to NYC & Co., the city’s official tourism organization.

That makes opening a hotel in this environment a challenge, and a property could fall well short of the revenue needed to pay for enormous ramp-up and operating costs. The New York Hilton, one of the city’s largest hotels with more than 1,900 rooms, for one has no immediate plans to reopen, a spokeswoman said.

Opening too late runs the risk of many guests developing loyalty with competitors once the market springs back.

“That is the magic balancing act,” said

Alex Ohebshalom,

developer of the Fifth Avenue Hotel, a 153-room luxury development that completed exterior construction earlier this year but is holding off opening, perhaps until the fall, when Broadway theaters are scheduled to reopen.

The new Fifth Avenue Hotel in Midtown Manhattan, which is expected to open later this year.


Andrew Rugge/Perkins Eastman

New employees need to be trained in Covid-19 protocols, such as how to handle guests reluctant to wear masks. The Mandarin Oriental at Central Park reopened in early April. Its staff hands unmasked guests an envelope with the hotel logo and “We Care” on the outside and a mask on the inside. “It’s worked every time,” said Susanne Hatje, general manager.

Managers of the Arlo said that guests can opt to reuse the same sheets, so housekeepers will stay out of their rooms. That has been a preference of many guests at the chain’s other hotels during the pandemic. “We have lived with this,” said Oleg Pavlov, Arlo chief executive of Quadrum Global, the developer of the Arlo chain.


Do you have plans to stay in a hotel? If not, what would make you comfortable doing so? Join the conversation below.

New York’s hotel market enjoyed strong demand and rising rates during the second half of the past decade. But it was showing signs of weakness, partly because of oversupply, in the year leading up to the pandemic. In early 2020, mortgage defaults by New York hotel owners were on the rise, and average daily rates were well off peak levels.

The pandemic delayed the reckoning the market was facing with the thousands of rooms under development, according to hotel owners and analysts. Projects like the Six Senses New York, the first North American property of a Thailand-based ultraluxury hotel brand, suffered construction delays. The company now expects to open in New York in 2022.

“We’re glad we didn’t open into the heart of the pandemic,” said Neil Jacobs, Six Senses chief executive. “On the other hand, the bills still need to be paid and the debt needs to be serviced.”

Startups, governments and nonprofits are racing to create so-called “vaccine passports,” or digital health passes aimed at helping people travel and safely move around in public. WSJ explains what it would take to get a global digital health pass system off the ground. Illustration: Zoë Soriano

Write to Peter Grant at [email protected]

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