Marriott International Inc. (MAR:US), the owner of brands including Ritz-Carlton and Renaissance Hotels, is opening the tallest U.S. hotel building in New York as tourism in the city reaches a record.
The 68-story tower at the corner of Broadway and 54th Street houses a 378-room Courtyard hotel and a 261-room Residence Inn. The property reaches almost 753 feet (230 meters), making it the tallest hotel without accompanying offices or residential space in the U.S., said Kathleen Duffy, a spokeswoman for Marriott’s hotels in New York City. The two-tower Time Warner Center at Columbus Circle, a mixed-use development with a Mandarin Oriental hotel, is 750 feet.
“I’m certain either one of them would have done fine on their own,” Marriott Chief Executive Officer Arne Sorenson said today at the opening of the two hotels. “But here you’ve got a great location, an A-plus location, with two distinct products that will appeal to two distinct kinds of stays.”
Marriott is opening the property as hotel demand in the city soars. New York had a record 54.3 million tourists last year, former Mayor Michael Bloomberg said on Dec. 10. The city is likely to have 55 million visitors in 2014, said Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg LP.
Marriott has about 100 hotels across the U.S. that offer as many as three Marriott brands within one property, and the company is looking for more opportunities to pursue such projects, Sorenson said.
The New York hotel property, which began serving travelers on Dec. 29 and had its official opening today, cost $320 million to build. It’s operated under a franchise agreement between Marriott and builder Granite Broadway Development LLC, the property’s owner, and is managed by Arlington, Virginia-based Interstate Hotels & Resorts Inc.
Granite bought the land in 2001 for $32 million, when it had three “non-distinct buildings” with a restaurant, a pornography shop and a clothing store, CEO Harry Gross said at today’s event. New York-based Granite took several years to decide to build a hotel, after also considering a mixed-use project with a hotel at the bottom and residential condominiums in upper floors.
“But at the time, the condominium market went to pieces,” Gross said. “So therefore, seeing that, two hotels would make sense, especially if they catered to two different segments.”
Hotel occupancies of 85 percent and average room rates of $254.32 last year through November in New York were the highest among the top 25 U.S. markets, according to data from Hendersonville, Tennessee-based STR. Occupancies were at a 13-year high in the city, according to the research company.
Occupancies at New York City hotels probably will decline slightly in the next two years as more hotels open, increasing competition, STR said. About 12,000 rooms will be added in 2014, bringing the city’s total to about 120,000 and causing occupancies to drop to 83 percent this year, the firm said.
Demand from events like the National Football League’s Super Bowl on Feb. 2 and an influx of business and leisure travelers throughout the year will help fill rooms, Duffy said.
“There is plenty of demand in this city for all of us,” she said.
Marriott’s other properties in New York include an Edition hotel, part of a luxury boutique brand it’s been developing with hotelier Ian Schrager. The company in August announced the planned sale of the Manhattan development at Madison Square Park, expected to open in the first half of 2015, as well as an agreement to sell an Edition project in Miami Beach and a London location that opened in September. The company said today that it sold the London Edition, and the total purchase price for all three properties is expected to be about $815 million.
The Marriott property opening today will have a shared entrance and lobby on 54th Street for both its hotels. Courtyard rooms are on floors six through 33, and Residence Inn rooms are the 37th through 65th stories, with public areas on the levels in between the two hotels. The Courtyard hotel will target leisure and business travelers, while the Residence Inn rooms are geared toward longer-term customers, Duffy said.
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