When Irish Eyes Are Smiling Regarding Manhattan’s Hospitality Sector
The Commercial Observer:
The hospitality industry seems to be booming, at least in comparison to other real estate sectors in New York. Are you seeing that as well?
Mr. Fitzpatrick: Yeah, there’s no doubt about it, things have turned around in the last 12 to 15 months. Now, it’s not gangbusters, but it’s definitely showing really positive signs.
I think that this recession is different than any other one in that coming out of it will be a lot slower. But we definitely see a positive. And I think it comes down to when the bad times hit, everybody in the industry cut back; and the first thing you think about is cost savings, but like our own business, you can only cut so much and then you realize you still have to sell. So I think a lot of corporate companies realized that they had to get back on the road again—you can only do so many teleconference calls before you realize that face to face is still the only real way to close a deal.
So we definitely see our corporate business picking up, as well as our leisure business, definitely. And Mayor Bloomberg is a fantastic mayor in the sense that he really gets tourism. He understands that it’s so vital and that after the financial business in New York, tourism is the next biggest thing. So it’s definitely coming back, yes.
In terms of activity, are you seeing more hotel construction?
I think what we’re seeing now is a lot of the construction projects that started before the crash—because it takes four or five years to get things off the ground—so now these are all coming back. The next thing we’re looking at is the amount of hotel rooms opening in the next year. These buildings that started before the crash are beginning to finish and they’re beginning to open. We had so many openings last year. Now we’re into it again, and this year there’s another crush of hotels opening.
That’s mostly in New York, not the rest of the country?
Yes, initially just in New York. Now, we’re lucky, too, in the sense that we’re the only Irish hotelier in New York, so we kind of bring in a lot of the Irish business, and the European business as well. But we’re seeing that a lot of hotels, brand-new hotels, are coming online. But it’s going to be tough in a sense, too, because we’ve got to hope the city can absorb all these new rooms-that the economy can come back.
With the hospitality industry at large, and also with you personally, what should we expect with regards to 2011?
The occupancy even during the bad times was high; you were up in the 80th percentile. And that was because a lot of the hotels put out good deals; and we used our heads to keep our occupancy up and to keep cash coming in. But near the latter part of 2010, we saw the rates coming back, which was good. So that’s a strong sign, and we definitely saw that, and I think it’s moving that way. It’s January, so it’s a little bit slow, but it’s still better than last year.
And I think we’ll see ourselves improve an awful lot and get our rates back up to where they should be. What you’ve got to realize, too, is that you’ve got to reinvest in your properties to keep them up to standard. And we were lucky enough that, among our hotels, we had started the Manhattan and just finished that one on 55th Street, and then began the Fitzpatrick Grand Central—totally revamped it and redid all the rooms, the lobby and the bar.
What’s the status on your hotel at Grand Central? Did renovations grind to a halt?
We stopped, of course, for Grand Central when it hit bottom. But as someone said, ‘Never waste a recession.’ I stopped the renovation work at Grand Central, and my contractor came back and I said, ‘Look, I can’t go, we got to hold back.’ And then he said, ‘Well, with a review of our prices, would you consider it,’ and that kind of set off a little light bulb in my head, and so I got everybody back into the room, and we were able to continue the renovation. That was 12 or 15 months ago when we started, and now I’m hoping to finish by the end of March, doing a floor at a time.
But basically I got my construction costs down by about 30 percent. But more importantly, I didn’t lose revenue on room—because my occupancy was slightly down. We hope now that by the end of March, we’ll have our second hotel totally revamped and ready to take advantage of the upturn.
What’s the difference between Irish hospitality and American hospitality?
I wouldn’t criticize one or the other, but I would say our hospitality is … My father set up this company, and we started out our hotel in an old castle in Ireland, which he converted. But as we expanded, I remember him saying to us, he says, ‘Never forget, no matter how big you get or how many hotels you have, John, you’re still an innkeeper.’ And I think it’s a really important thing to remember.
A lot of hotels have forgotten that customers want to be recognized; customers want to be looked after. And in a sense—because we’re a small hotel group—we can do it. And it’s all about personal service, recognizing your customer and recognizing their needs. And this is my own personal thing, but when I open a hotel, I always make sure that my general manager’s office is in the lobby. The general manager, historically, has always been about being close to the customer. Now, it’s only about budgets at a lot of places.