Hotel boom brushes Fairfield County
In Shelton this month, the Hotel Sierra celebrated its grand opening on Bridgeport Avenue. At its offices across town on Corporate Drive, developer New Castle Hotels & Resorts marked the opening of its 31st lodging, on Jekyll Island in Georgia.
As much as any industry, the hospitality business is prone to surprising plot twists along the lines of Dr. Jekyll and Mr. Hyde ”“ particularly recently as a hotel construction boom has continued despite the recession”™s impact on business and leisure travel.
In New York City, developers are topping off new hotels that will increase the Big Apple”™s available room count by 9 percent in the coming year, according to PFK Hospitality Research, an Atlanta-based market research company.
While PFK determined the average U.S. hotel saw profits drop by more than a third in 2009 ”“ the largest year-over-year drop the company has tracked dating back to the Great Depression ”“ PFK also predicts U.S. hotels will enjoy double-digit growth by 2012.
In short, hoteliers are betting that the collapse of the financial markets of the past few years will not have a long-term impact on the hospitality sector, according to Frits van Paasschen, CEO of White Plains, N.Y.-based Starwood Hotels & Resorts Worldwide Inc., which is relocating its headquarters to Stamford in 2012.
Stamford itself has a new boutique hotel, after a former YMCA lodging was converted last year into the upscale Hotel Zero Degrees, and another slated for Building & Land Technology”™s Harbor Point development. Other hotels have undergone multimillion-dollar renovations the past few years, including the Hilton Stamford Hotel and Executive Meeting Center and the Stamford Holiday Inn Downtown.
“I wish I had a new hotel for every time I was asked whether luxury was dead,” van Paasschen said, in a conference call reviewing the company”™s first-quarter results. “My answer (is) always the same: when people and business feel better about the world, they won”™t resist the allure of luxury. Today, the paranoia has subsided and our luxury properties are enjoying the strongest REVPAR gains of any segment. The business traveler is back, and leisure travelers are rewarding themselves with vacations to our one-of-a-kind properties.”
According to Smith Travel Research, New England has enjoyed the best year-over-year rebound in revenue per available room (REVPAR) at 6 percent, followed by New York, New Jersey and Pennsylvania at 4 percent. Every other major region in the country continued to have year-over-year drops in the first quarter.
“In the first quarter we saw the early signs of a rebound in demand and our operators were able to capitalize on the reemergence of the corporate traveler,” said Jay Shah, CEO of Hersha Hospitality Trust Inc., which owns the Residence Inn by Marriott in Danbury. “We are in markets that, historically, come back first in the country and New York is, once again, leading the ”¦ recovery as it typically does ”¦ Connecticut (and) Rhode Island helped to lead our portfolio growth, with Boston posting 13.4 percent growth and our Connecticut (and) Rhode Island cluster posting 5.4 percent (growth).”
Even as hoteliers build, others will be looking to buy ”“ including Starwood Property Trust Inc., created by Starwood Hotels founder Barry Sternlicht but not an affiliate.
For his part, van Paasschen thinks the best deals may be in the rear-view mirror.
“Many real estate investors today may still be hoping to scoop up assets at bargain prices,” van Paasschen said. “But with the amount of money piling up on the sidelines, buyers need to realize that the great distress sale of 2010 is unlikely to materialize.”