NEW YORK? For the first time in Manhattan?s history, the development of luxury hotels in the downtown area makes sense thanks to its maturing community, which is why two new luxury hotel projects? a Ritz-Carlton and a Regent Hotel International? have recently been planned to fill the void of rooms in that area. Traditionally, Manhattan?s midtown area has acted as the hub for luxury lodging within the city. But in recent years, the city has swiftly grown outside of its traditional midtown ?box,? with downtown attractions like the Museum of Jewish Heritage and Pier A drawing crowds to the area. As a result, Millennium Partners announced that it will develop a luxury Ritz-Carlton hotel at Manhattan?s Southern tip in the Battery Park area as part of a $175 million mixed-use project. The hotel, which was planned in conjunction with the Battery Park City Authority, will occupy the lower 13 floors of a 38-story tower that will be built by Millennium Partners on a site that offers unimpeded views of Battery Park, Ellis Island, the Statue of Liberty, the Hudson River and New York Harbor. The new Ritz-Carlton property, which is scheduled to open in 2001, provides the luxury hotel company with a unique site fed by local businesses. ?It is an outstanding business address,? said Jim Schultenover, vp/sales & marketing for Ritz-Carlton. ?We do a lot of business with financial organizations in that area. When Millennium Partners announced the deal, we had calls for business immediately.? The changing fundamentals in downtown New York City have made it possible to support such new lodging concepts, said Sean Hennessey director of Hospitalty & Leisure at PricewaterhouseCoopers. The New York market is so strong, he said, that most hotels are turning away 40 to 50 room nights per day because of capacity constraints. ?The addition of two hotels is a drop in the bucket compared to what the city can take,? he said. ?Downtown has become more of a real neighborhood and operators are looking to capture the business there. This is the first time that five-star luxury properties can work in the downtown market.? Regent International is also working on a deal for a downtown address, sources said. The company is in talks to develop a hotel that would benefit from local attractions, but also draw its own crowd with amenity-laden facilities that include meeting space and a full-service spa, according to Tom Polski, vp/communications for Carlson Hotels Worldwide, parent company of Regent International. ?Downtown is now considered a more affluent area, somewhere people would be willing to go with enhanced attractions,? said Hennessey. The renaissance of downtown is evident in its strong lodging demand. Some of the latest statistics from PricewaterhouseCoopers prove that not only is the demand for lower Manhattan on the rise, but that the area can certainly withstand new deluxe lodging facilities and has the room for additional growth. According to preliminary end-of-year 1998 numbers from PWC, citywide occupancy in 1998 was 83.5%, with downtown Manhattan occupancy more than 3% higher at 87%. Citywide ADR in 1998 was $205, while downtown Manhattan ADR was $15 higher at $220. Overall, the deluxe segment of the city performed well. In 1998 citywide deluxe hotel occupancy was 80% and deluxe ADR was $335. While the deluxe segment performed better than that of downtown Manhattan, the numbers also show that lower Manhattan occupancy and ADR is higher than the city as a whole. This proves that downtown is increasing in popularity and has a lot of potential for growth, particularly in terms of rate, said Hennessey. With strong fundamentals, and luxury operators like Ritz-Carlton and Regent International betting that they can pull rooms away from midtown and the upper East side, you can bet this won?t be the last of the development downtown, analysts said. The New York Ritz-Carlton project, which is expected to begin construction before year?s end, will also
