For a while there, a big surge could be found in the hotel market of … Staten Island?
It’s true. Back in 2013 the hotel market got a big boost. But it doesn’t look like this will be sustained.
STR, a global provider of competitive benchmarking, information services and research to the hotel industry, recently released their annual historical trend and pipeline reports that take a close-up look at how hotels fared in the five boroughs, and what’s in store.
Staten Island’s 2014 numbers are grim: Occupancy rates declined 15.3 percent coupled with what was a 2 percent rise in supply. Demand went down 13.2 percent and overall revenue went down 21.4 percent. There was a notable absence of luxury and upper upscale hotels in the pipeline and just one independent hotel in the planning stage.
Richard Nicotra, chairman of the Nicotra Group, which owns the Hampton Inn and Suites and the Hilton Garden Inn, both located in the northeastern part of the island, said that things will be rough for hoteliers for the foreseeable future.
Mr. Nicotra said the biggest things affecting Staten Island’s hotel business are taxes that dwarf neighboring New Jersey’s, the lack of transportation and no industry presence.
STR reported that the average daily room rate declined 9.4 percent. Mr. Nicotra said that while high guest taxes are not any lower in Manhattan, guests still have to pay tolls to get to Staten Island or get into New Jersey. He recounted that neither of his hotels saw bookings from game-going visitors during last year’s Super Bowl at New Jersey’s Meadowlands, which is about 10 minutes from his properties.
Jan Freitag, senior vice president of STR, said that if you look at the bigger picture, Staten Island’s numbers aren’t declining—they’re simply getting back to where they were before Superstorm Sandy.
“2013 was an outlier year,” said Mr. Freitag. “You saw demand grow 60 percent between November 2012 and March 2013, because there was an influx of displaced people. The idea was to get back to their homes, not stay there forever. So the drop in 2014 is no big surprise.”
Mr. Freitag noted that in 2011, 174,000 rooms sold in Staten Island, and in 2012 the figure was 185,000. “In 2014, there were over 183,00 rooms sold. So as you can see, numbers are meeting previous years, when [the borough’s hotels] were seeing an increase in sales.”
In 2013, numbers went up across the board an average of over 9 percent for Staten Island’s hotels, from room and occupancy rates to total revenue.
Despite major development projects going on in the borough, which include the construction of the New York Wheel, the world’s biggest Ferris wheel, and the city’s first outlets, 2015 doesn’t look promising, said Mr. Nicotra. “There’s no industry. Until we get businesses that need rooms, there won’t be a demand. And if people think that Google is going to open up headquarters on Staten Island, I’m telling you it’s not going to happen.”
Mr. Nicotra said 2015 will likely be the worst year he will see in both of his hotels, with continued loss of guests to New Jersey and increased competition thanks to the opening of a new Holiday Inn last year.
“People look at Staten Island and they see a population of 500,000 and think there’s a need here, and there’s not,” Mr. Nicotra said.
Two hotels, which were independent, bowed out of Staten Island’s pool of 10 hotels, which consist of mostly independent and upper-midscale hotels. According to STR’s pipeline report, one unnamed hotel is in the planning stage, and will be located on Bank Street, in the heart of St. George and close to the New York Wheel. The independent hotel will have 200 rooms. The anticipated opening date was unknown.