Home Economy Business travel drives Fairfield and Westchester counties’ still lagging hotel market

Business travel drives Fairfield and Westchester counties’ still lagging hotel market

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Andy Warhol once wryly observed, “They always say time changes things, but you actually have to change them yourself.” The iconic artist’s observation could apply to how the hotel industry in Westchester and Fairfield counties has reacted to economic shifts in its recovery from lean years and lower occupancy rates that stemmed from the Great Recession.

“Demand has been relatively flat in the market of the last several years,” said Mike McNeill, general manager at the Doral Arrowwood Hotel Conference Center in Rye Brook. The hotel recently completed a $4 million renovation project to “refresh” its guest rooms, McNeill said.

corporate hotels westchester fairfield business travel
Charles Mallory. Photo by Kaitlin Parry.

Hotel trade here “is not as bad as it had been in the last couple of years,” said Charles Mallory, founder and CEO of Greenwich Hospitality Group. “It is not horrible, but it is not mirroring national trends.”

Nationally, CBRE Hotels has reported travel research showing that hotel demand increased by 2.8 percent in this year’s first quarter. The first-quarter national occupancy rate of 61.1 percent was the highest reported for the quarter in the last 30 years.

Lodging demand is forecast to rise by 2.1 percent nationwide this year from 2016, according to CBRE Hotels.

Many hotels in Fairfield and Westchester attract corporate guests attending conferences in the region or meetings with companies headquartered here. “For the major flag-branded hotels — Hilton, Marriott, Hyatt — their primary source of income is corporate travel,” said Dan Conte, general manager of the Westchester Marriott Hotel in Tarrytown and president of the Westchester Hotel Association. “Tourism is certainly important, but the division between corporate to tourism is a 75 percent to 25 percent split” in hotels’ business.

That division can be a disadvantage to smaller boutique hotels in this market, said Lloyd Nakano, general manager at the 35-room Castle Hotel & Spa in Tarrytown. “We would love to have much more business clients,” he said. “Sunday through Thursday, we are suffering. But on Friday, Saturday and holiday eves, we are almost always sold out” with getaway travelers.

In Fairfield County, General Electric’s relocation last year of its corporate headquarters to Boston has had an impact on the hotel industry, said Ronald Antonucci, general manager of the Stamford Marriott Hotel & Spa. “We are still getting some fallout from GE, most definitely,” he said. “We certainly hated to see them go. Companies would be coming to Stamford because they did business with GE, so it is hard to quantify all of the other affiliated business that goes along with it.”

However, GE’s departure has not radically altered the county’s hotel market, according to Anne R. Lloyd-Jones, managing director in the Long Island office of HVS, a hospitality consulting firm.

“Fairfield County is not like some other areas of the country where one or two companies are dominant in terms of hotel demand,” she said. “It is having an effect, but not a dramatic effect. The good thing is that everyone knew they were leaving — it was not like the Baltimore Colts sneaking out overnight. Hotels knew about it in advance and they were able to plan ahead when demand would not be there.”

Conte at the Westchester Marriott noted that the suburban proximity to New York City, once a main selling point for hotels in the metropolitan region, may be an outdated marketing strategy as the city’s hotel industry adjust to its own imbalance of supply and demand. “Rates are so much lower that it is now more affordable,” he said of the Manhattan hotels.

Lloyd-Jones agreed. “There has been a significant increase in supply over the last three years and it will be continuing for the next two years,” she said of the New York City market. “A lot of that supply is in the limited service/value price category. That does not mean cheap rooms but what people perceive as having a good price value. Now there is so much inventory that Manhattan is more accessible to price-sensitive customers.”

In Fairfield, Greenwich Hospitality Group is marketing luxury accommodations for both business and leisure travel rather than appealing to hotel bargain hunters at its Delamar Greenwich Harbor and Delamar Southport hotels.

“People are seeking out more exceptional places,” said Mallory. “The appeal of humdrum franchise hotels is not as good today. And coming to a 500-room hotel in the middle of downtown Stamford for a weekend getaway is a bit of a tough sell.”

Thomas Madden, Stamford director of economic development, said the city’s 2,700 hotel rooms average from 71 percent to 78 percent in occupancy. Stamford hotels are expected to approach full occupancy next winter with demand related to the 2018 Winter Olympics in South Korea.

“We are looking forward to the Olympics,” said Madden. “NBC booked out the hotels in February to broadcast Olympics out of Stamford.

More hotels are in the planning and development stages. In Tuckahoe in Westchester County, Bilwin Development this summer is cleaning up the environmentally contaminated site of a former quarry and landfill to make way for a five-story, 153-room Marriott Springhill Suites hotel.

Bill Weinberg, principal at Bilwin Development, told the Business Journal last month that he pursued the $31 million project because he believed the county’s hotel market was ripe for more competition. “There is still a great demand,” he said. “They are all at an extremely high occupancy level.”

Yet McNeill at the Doral Arrowwood had a different view of the market. “I don’t think there is a need for more supply at this time,” he said.

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