By Orlando Rodriguez
Choice Hotels International Inc. has announced its first foray into the New York metro-area with a $141 million investment into the development of three new Cambria Suites branded hotels targeting an upscale market.
Two of the hotels will be located in Manhattan with the third just north of the city in downtown White Plains.
Collectively, all three locations are expected to add close to 1,000 permanent jobs to the region. Shares of Choice Hotels (NYSE:CHH) rose +1.24% after the announcement.
City tourism executives were optimistic that the new construction would be successful in serving New York enormous tourist influx, the highest in the nation.
“New York City is expanding at about six times the national average in terms of hotel development,” said George Fertitta, chief executive officer of NYC & Company.
“Our occupancies are at about 87% this year,” he said. “There is no place in the country or virtually in the world that has those type of occupancies. I have no doubts about the success.”
The midtown Manhattan location will be marketed as the Cambria Suites–Times Square and will be located at 30 West 46th Street just east of Fifth Avenue, two blocks east of Times Square. The 81,000 s/f property will have 196 suites and should be open by the winter of 2014.
The hotel should benefit from its location in the heart of Little Brazil, when thousands of tourists from one of the largest and fastest growing economies flood into New York City for the two-day Brazilian Independence Day festival held each Labor Day weekend on the same street.
The Cambria Suites-Chelsea, will rise at 123-125 West 28th Street between 6th and 7th Avenues in the emerging hotel-heavy Flower District. It will be flanked on either side by existing new hotels. The 56,500 s/f property will have 135 suites and will open in the spring 2014.
The West 46th Street location will be a joint venture between Choice Hotels and Concord Hospitality Enterprises Company of Raleigh, North Carolina. Concord manages more than 90 hotels in the United States and Canada, including different tiers of Marriott, Hilton and Hyatt brands.
The Cambria Suites-Chelsea will be the first hotel development venture for We Care Trading Company LTD, an import-export/manufacturing enterprise started in 1973 that now has industrial real estate holdings in New York and Los Angeles.
“It’s not something we’ve done before,” said Robert Chun of We Care Trading metamorphosis into a full scale real estate development company. “But we believe it is going to be the future of our business.”
Brothers Robert and Philip Chun, after inheriting operational control of We Care from their father, decided to transform the business into a full scale development company. Concord Hospitality will manage the property once completed.
“About two years ago, we met Robert Chun and his brother Philip,” said Michael Murphy, senior vice president of Cambria Suites about the background of the developmental partnership. “They made a strategic decision to advance their positioning in business into the hotel industry. We started coaching and counseling them on what it would take to get into the hotel business.”
Despite having to invest more equity than originally anticipated, the Chun brothers remain bullish on the hotel venture and their decision to partner with Choice over other hotel brands that had approached them about development.
“They [Choice] appreciated the fact that we were going to be first time hotel owners,” said Robert Chun said of Choice’s management. “They didn’t shy away from it. It wasn’t ‘we have to find ways to minimize our risk’.”
The Flower District, just south of Madison Square Garden and Penn Station, has bloomed in the past few years with new hotel construction. The hotel boom south of 30th Street has now stretched as far east as Broadway, revitalizing an area that ironically was home to many of the city’s luxury hotels in the early 20th century.
“Part of the aspect of the location which is good for us is that we will be surrounded by two hotels, one
to our left and one to our right,” said Michael Murphy on the choice of the W. 28th Street location.
Murphy said he does not fear oversaturation, pointing out that market studies predict continued tourism demand for Manhattan hotel rooms, growing at a rate between 4.5 and 7.5 percent each year until 2017.
“We already know the excess demand in that Chelsea area,” he said. “For the Times Square property, we know for certain it’s going to be a 90+ (occupancy) market.”