Bridging The Gap
The distance — 5,989 feet across one of the oldest and most impressive suspension bridges ever built in the U.S. — hasn't changed, yet Brooklyn feels closer than ever to Manhattan.
The boroughs, separated by the East River and connected by the Brooklyn Bridge, once seemed worlds apart. Wall Street, Broadway, Central Park, all within a New York minute of Brooklyn, seemed a lifetime away. Despite a larger population — with more than 2.5 million people, Brooklyn would be the fourth largest U.S. city — the borough lived in the shadow of Manhattan (1.6 million people). Travelers rarely visited, and when they did, the stay had to be short. There weren't any hotels.
That changed in 1998, when the New York Marriott at the Brooklyn Bridge opened after 15 years of delays and doubts. It was the first new-build hotel in the borough in 64 years and it's still the only full-service hotel there. It started with an 85-percent occupancy rate in 1999, earned Marriott Hotel of the Year awards in 2000 and 2001 and a 24-story, 280-room expansion tower was added in 2006. Its success has been nothing short of remarkable. As the hotel closes in on its 10th anniversary this year, the rest of the hotel world is finally following suit.
LEADING THE WAY
The story of the Marriott Brooklyn Bridge wouldn't be complete without Joshua Muss and Sam Ibrahim. For Muss, the developer, it was his first hotel. For Ibrahim, the general manager, it was the latest in a long and decorated career in the industry.
The project began in 1983 as part of the Brooklyn Renaissance Plaza. Muss was on board from the start, interested primarily in the commercial office component rather than the hotel that was a mandated part of the mixed-use project.
“Brooklyn was tarnished by its name, its reputation,” says Muss, the principal of Muss Development LLC, a company started by Muss' grandfather in 1906 and one of the leading developers in New York City. “It's not a big city, it's part of Manhattan — that was the perception at the time…Manhattan is where it's at, everything else is a bedroom community. Even if there was a first-class hotel in Brooklyn, who would want to stay there? That was the perception.”
When he kept forging ahead despite financing, zoning, construction and other political issues and problems, Muss admits, another perception might have been he was crazy.
“Certainly there was a degree of surprise and skepticism with the project,” says Sean Hennessey, CEO of Lodging Advisors LLC, a firm that specializes in consulting services to the hospitality and real estate industries.
Thirteen years later, in July 1996, construction for the Renaissance Plaza broke ground. Two years after that, at 333 Adams St., where an underground parking garage once sat, the mixed-use complex opened.
The seven-story hotel and 32-floor office building is across the street from MetroTech Center, a district of businesses, universities and government agencies, the first piece in the borough's urban revitalization. In 2006, the 24-story tower was added to the Marriott, bringing the total room count to 665.
“I wasn't surprised” at the success, Muss says, “but I was surprised at how immediate it was.”
Ibrahim, a 33-year veteran of Marriott, was the perfect choice to lead the new hotel and became general manager in 2000.
“Make no mistake, this is a neighborhood hotel,” he says. “In Manhattan, you're one of 2,000 hotels. There is more visibility here because you're the only show in town. In Manhattan, it's transient; it's in and out. Here, it's relationship building.”
Ibrahim says about 70 percent of the staff is from Brooklyn — he jokes they brainwash the other 30 percent — and the neighborhood culture has been the key to some of the best customer satisfaction scores throughout Marriott.
“That's why the staff is so invested,” he says. “Everyone refers to this as their hotel. It's ‘our hotel, Brooklyn's hotel.’ Look at me: I'm from Beirut, I live in Garden City, NY, but I live and breathe Brooklyn. I feel like I'm from Brooklyn. It's a powerful culture.”
The 33,000 square feet of meeting space, including the fourth largest ballroom in New York City, allowed the hotel to immediately compete head-to-head with Manhattan for group business.
Once the hotel landed the first wave of guests, with the help of Marriott's strong customer loyalty program, Ibrahim rode it. And he still is today.
The hotel's occupancy rates remained the same, around 85 percent, even after the additional 280 rooms were added two years ago. Ibrahim expects that to reach close to 90 percent this year based on the strong start in the first quarter.
“Once people discover the hotel, they never go back to Manhattan,” Ibrahim boasts. The hotel is one subway stop from downtown Manhattan and has 14 subway lines and 11 bus routes around the corner, making it a convenient commute into Manhattan. Business travelers can stay in Brooklyn and work in Manhattan, while tourists can get the best of both worlds.
With the skyrocketing hotel rates throughout New York City ($304.52 on average in 2007, see sidebar, Page 46), thanks predominantly to more demand than supply, the Marriott Brooklyn Bridge became a viable and sometimes cost-effective alternative. Ibrahim says rates are similar to his Manhattan counterparts, though when rates reach $700 across the bridge, his only top out at around $400.
FOLLOWING THE LEADER
If the Marriott's success was surprising, the fact that it took nearly a decade for other hotels to follow is shocking.
“Brooklyn presents an opportunity to have attractive sites, great transportation to Manhattan, lower construction costs and an increasingly prevalent view that staying in Brooklyn is not a second-rate compromise for a visitor or a tourist to the New York market,” Hennessey says.
Joe Guay, an equity partner for Holland & Knight, whose specialty is hotel development and hospitality law, agrees, but says part of the delay was the result of 9/11.
“You're probably looking at a two- to three-year time frame, conservatively, for a typical hotel deal in New York City,” he says. “Hotels that are coming on line now were planned three years ago. Everyone pulled back in 2001 and people started doing deals again in 2003 and 2004. Now those are coming on line.”
The first to follow in July 2006 was a 115-room Holiday Inn Express in the Park Slope section of Brooklyn. A 104-room Comfort Inn opened less than a half-mile from there in May 2007. Both were developed by McSam Hotel Group and are managed by Magna Hospitality Group. Robbie Wilson, city manager for Magna, says both hotels have exceeded expectations so far. Hotel Le Jolie and hotel le bleu, both boutique properties with around 50 rooms, opened last fall.
The Marriott's success has mirrored Brooklyn's revival and with continued compression and a scarcity of land in Manhattan, the once-forgotten borough has become a hotbed of hotel activity.
Brooklyn has three percent of New York City's current inventory of 73,333 rooms, according to NYC and Company; Manhattan has 88 percent. Those numbers will see a dramatic change in the coming years. NYC and Company projects an additional 12,000 rooms in the city's pipeline, with 3,000 of those to be built in Brooklyn by 2011.
The Smith Hotel (93 rooms), a Sheraton (325 rooms) and an aloft (175 rooms) are scheduled to open this year, while a joint new-build Homewood Suites and Hilton Garden Inn will open next year. A Hotel Indigo and a Cambria Suites will follow in 2010.
William Edmundson, president of Choice Hotels' new upscale lifestyle brand, Cambria, believes the Brooklyn location, along with another across from Madison Square Garden in Manhattan, are “true billboard locations,” showing just how far Brooklyn's image has come.
Ultimately, even Muss and Ibrahim believe the rapid surge in hotel development is a good thing.
“If you have a citywide convention and you need 1,000 roomnights and I only have 665, it will put you out of that league,” Ibrahim says. “There's always pluses and minuses to things, but this is putting Brooklyn on the map. It creates more business for everyone.”
Muss adds: “If a person Googles downtown Brooklyn and only finds one hotel, they might think there's something wrong. This helps the perception and will attract larger conventions.”
As hotel deals are scuttled around the rest of the country, projects in Brooklyn continue. Guay and Hennessey believe there could be a slowing, but that foreign travel, especially to a gateway city like New York, will continue to keep demand strong. Ibrahim says he's seen European travelers coming with empty suitcases and leaving with them filled.
“I think the future remains relatively positive,” Hennessey says. “A number of factors continue to suggest a substantial demand and New York City has been operating at close to capacity for a number of years. A lot of hotels throughout Manhattan continue to turn away customers and a lot of that unmet demand is pushing business elsewhere.
“Brooklyn is well positioned to capture a lot of that because frankly it's being viewed as an extension of Manhattan with the hipness of neighborhoods, a number of restaurants, shops and now hotels.”
Slice of the Big Apple
Joe Guay calls the Manhattan hotel room crunch a classic case of supply and demand. Visitors to New York City generated nearly 23 million roomnights in 2007, according to NYC and Company, yielding an 86.5 percent occupancy rate with average daily rates of $304.52. An estimated 46 million people visited the city last year, up five percent from 2006. Foreign visitors, up 17 percent last year, are expected to increase again this year.
“New York City has really come back from 9/11,” says Guay, an equity partner for Holland & Knight. “The dollar is very weak. New York is a gateway city. There is just a tremendous demand for hotel rooms.”
Last year, the city as a whole added 1,700 hotel rooms and this year another 6,600 additional rooms are expected, with 5,500 more planned for 2009 and 2010.
Cambria Suites President William Edmundson says the residential demand during the past decade, first in Manhattan and then Brooklyn, took a lot of the hotel business away as “developers rode the condo wave.”
Choice Hotels is bringing its new upscale lifestyle brand, Cambria, to New York City with locations in both Manhattan and Brooklyn, scheduled to open in 2010.
“There's been a slowdown in the residential component that has made more sites available to hotel developers,” says Sean Hennessey, CEO of Lodging Advisors LLC. “The rapid run-up in room rates after falling from 9/11 has improved hotel business and the profitability has made development more attractive.
“The lending and equity-investor community has seen hotels in New York City as a less risky investment. That's come together to create a wave of new development.”
Hotels of all shapes and sizes are popping up throughout Manhattan. Over 25 newly built hotels are expected to open this year, including everything from the usuals (Holiday Inns, Four Points, Hampton Inns, Garden Inns and Fairfield Inns) to the exotic (Robert De Niro's Greenwich Hotel, Kimpton's VU Hotel and two Hyatt Andaz hotels). There was also a huge renovation project: the $400-million transformation of the iconic Plaza Hotel, which reopened in March.
Industry experts believe development could slow some, but deals will continue to be made.
“Developers and banks are still chasing that asset rather than residential,” Guay says. “But I think there will be a softening. A lot of lenders are taking a closer look at stuff now.”
With the economy in flux, developers and investors may take a wait-and-see approach to see if the supply begins to catch up to demand, says Hennessey.
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