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Making room at the inns as major events come to N.J.

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With occupancy on the rise and a new thirst for high-end hotel rooms west of the Hudson River, developers in New Jersey are checking back into the hospitality sector.

Several hotel projects are under way and many others are being planned, especially in northern New Jersey, which industry experts and builders say is emerging as a lodging option for New York City tourists. And it's a region whose hotel industry will be in the spotlight in the coming years — at least in small spurts — as events like the 2014 Super Bowl and planned Formula One races draw tens of thousands from beyond the state.

Nearly 4,000 new hotel rooms are in some stage of planning or development in northern and central New Jersey, according to Lodging Econometrics, a hospitality industry research firm based in Portsmouth, N.H. That includes 27 projects from Monmouth County to the north.

For Hartz Mountain Industries, which has three hotel projects in its pipeline, the push is being driven largely by New York's ever-growing tourism market, said Gus Milano, managing director of the Secaucus-based company.

“Ten years ago, it was 35 million (visitors), and we thought that was a large market,” he said. “Now, it's 55 million, and a lot of this market is New York City-dependent.”

Another key factor is that capital is now available for hotel development — a change from three or four years ago, Milano said. Hartz's new projects include two in its Harmon Meadow complex in Secaucus: a 154-room Residence Inn by Marriott, which is slated to open by February's Super Bowl, and a 170-room hotel at a former office site.

In the counties closest to Manhattan, developers and operators have been emboldened in recent years by the success of about five high-end hotels along the Gold Coast, said Jonathan Falik, who heads the hospitality investment practice for Newmark Grubb Knight Frank. In September, Newark opened its first new downtown hotel in 40 years, while other upscale projects are in development in the city and in neighboring Harrison.

“There are many other projects in draft form and in the works … because the brands have all done the feasibility analysis and done the work,” said Falik, who is based in Manhattan. “And they understand there's a huge demand.”

He said two of the five high-end Gold Coast hotels — the W Hoboken and the Westin Jersey City Newport — came online in 2009, at the lowest point of the recession. But the market suffered only modestly: occupancy fell that year from 83 percent to 73 percent, while average daily rates fell 24 percent, to $161, he said. Occupancy and room rates are now at or close to pre-recession levels, when the waterfront had two fewer hotels.

On the whole, hotels across New Jersey are mostly back to pre-recession numbers, according to Nashville, Tenn.-based Smith Travel Research. Occupancy levels fell to 53 percent in 2009, from nearly 64 percent in 2007, but were close to 62 percent last year.

But despite a pipeline that includes thousands of rooms, there are questions about whether a broader swath of the state can support new hotel development. Mark Giangiulio, chairman of the New Jersey Hotel & Lodging Association, said the state's slow employment growth is a concern for operators that rely more on business travel.

“Companies, if they're not really hiring, they're not training and they're not developing,” said Giangiulio, general manager of the Grand Summit Hotel, in Summit. “We haven't recovered enough yet to see that new influx of inventory into the marketplace.”

Yet leisure business can play an even bigger role if New Jersey can grow its tourism industry within its own borders, said Donald Hoover, a hospitality professor with Fairleigh Dickinson University. He pointed to the long-stalled American Dream Meadowlands project, which state officials and a developer are trying to resurrect after a decade of delays.

“It would be a tourism destination in and of itself,” Hoover said, noting its planners have projected an annual draw of 55 million visitors, equivalent to New York City. Plans for the complex call for about 3 million square feet of leasable space, a movie theater, and indoor water and amusement parks, among other attractions.

Officials also have sought to recast New Jersey's tourism strategy. Last June, Gov. Chris Christie signed into law a measure designed to centralize tourism functions under the New Jersey Sports & Exposition Authority. The agency is also now charged with attracting major sporting and entertainment events like the Super Bowl and WrestleMania, which came to MetLife Stadium in April and helped fill North Jersey hotel rooms for days.

E-mail to: joshb@njbiz.com
On Twitter: @joshburdnj

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Joshua Burd

Joshua Burd

Josh Burd covers real estate, economic development and sports and entertainment. Before joining NJBIZ in 2011, he spent four years as a metro reporter in Central Jersey. His email is joshb@njbiz.com and he is @JoshBurdNJ on Twitter.

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