Brooklyn Hotel Demand Growth Back on Track


For the first time since Superstorm Sandy forced people out of their homes and into hotels, quarterly room demand comparables are positive, data provided by lodging industry benchmarking services firm STR to Commercial Observer indicate.

SEE ALSO: After Tepid Growth, Brooklyn Hotel Room Rates Spike

Demand for hotel rooms increased year-over-year each month in the second quarter. Prior to this April, the last month there was a year-over-year increase was in September 2013.

Rendering of Holiday Inn Brooklyn Nevins Station.
Rendering of Holiday Inn Brooklyn Nevins Station.

“The first three months of this year were skewed because of the Superstorm Sandy impact and the last three months don’t have those outliers in them and the data is much cleaner,” said Jan Freitag, a senior vice president at STR.

Before October 2013, there were 29 months of consecutive positive demand growth. Superstorm Sandy was in October 2012.

“The performance of the second quarter of this year looks like it is just a continuation of the positive trend that started early in this decade,” Mr. Freitag said.

Occupancy was up in April, May and June year-over-year. The average daily room rate, revenue per available room, or RevPAR, and total room revenue dropped in April, but rose in May and June, all compared with the months prior. Supply was flat.

“Though supply is flat, Brooklyn is still absorbing new hotels opened in the past two years,” said Sean Hennessey, the CEO of Lodging Advisors. “It normally takes about three years for a hotel to fully establish its competitive footing.”

Brooklyn’s hotel pipeline looks healthy.

In the borough, there are 27 hotel projects with 2,416 rooms in the pipeline as of June, other data from STR show. That compares with 19 hotels and their 2,159 rooms in June 2013. Of the current 27 hotels in the pipeline, seven hotels with 544 rooms are in the planning phase, six hotels with 493 rooms are in the final planning stage and 14 with 1,379 rooms are in construction.

One hotel in the works is the $80 million 246-room Holiday Inn Brooklyn Nevins Station, which topped out last week at 300 Schermerhorn Street in Downtown Brooklyn, as Commmercial Observer previously reported. The Gene Kaufman Architect-designed hotel is slated to open in mid-2015.

There is also the planned 183-room luxury Level Hotel Brooklyn in North Williamsburg being developed by Zelig Weiss, as CO previously reported. It has an early 2016 opening date.

Also, Starwood Capital and Toll Brothers City Living‘s proposed development at Pier 1 in Dumbo will include a 200-room Starwood hotel. And Vos Hospitality will be building a Marriott Autograph Collection hotel in Fort Greene.