Hotel prices in the city have slid even as tourism surges.
Prices have fallen thanks to an oversupply of rooms, according to a New York Post report. In the past three years, prices of hotel rooms have fallen 30 to 50 percent.
That’s the result of a building boom that’s oversaturated the market. In 2007, there were 73,692 hotel rooms and 357 hotels, the report said. By 2017, that climbed to 115,532 rooms and 632 hotels. Plus, more than 18,000 additional rooms will enter the market by 2020.
For those looking to make deals, it’s an enticing environment. Developer Rotem Rosen and his partners at MRR Developoment bought Hotel Indigo on the Lower East Side for $162.5 million. And the Arden Group is reportedly in contract to buy the ground lease of the Viceroy Hotel at for $41 million, as The Real Deal reported. It last changed hands for $148.5 million in 2013.
But the market is bouncing back.
“Prices were low because we had an unprecedented oversupply,” said Jeff Davis, senior managing director of JLL’s hotels and hospitality group. “But that is already started to change. We are headed for an extraordinary recovery in the next 2 to 3 years.”
Real estate investment trusts, for example, saw a pronounced sell-off at the beginning of the year, amid investor pessimism. But hotel performance and an improved market has driven shares back up. [NYP] — Meenal Vamburkar