City’s hotel market stays strong, gets crowded
(4/6/2010) From Yale Daily News
In hotel market, challengers checking in
City’s hotel market stays strong, gets crowded
By Esther Zuckerman
Published Tuesday, April 6, 2010
Two years ago, the red-brick high rise at 205 Church St. was poised to transform from an office building into a four-star hotel.
But while plans for the new hotel are in limbo — with the building’s owner, Hampshire Hotels & Resorts, still trying to secure $50 million in funding from the city and state — a different hotel only a few blocks away is stepping up to challenge its competitors. The New Haven Hotel, on George Street between College and Temple streets, is undergoing a renovation to update the tired property that left the hotel lagging behind such venues as the Omni New Haven Hotel at Yale and the Study at Yale. While a renovation amid a recession may seem improbable, New Haven Hotel owner Jon Cohen said the updates were necessary to compete even though business has been slow.
“People liked the location of the property,” he said. “But I think in every respect they understood that it was very, very dated, and it just did not offer the types of amenities and decor that travelers are accustomed to.”
While it will be nearly two months before the revamped New Haven Hotel is fully operational, it remains to be seen what place it will have in the changing New Haven hotel market.
TIME FOR A CHANGE
Before the renovation, the New Haven Hotel's lime-green color scheme screamed 1980s. So when the Newport Hotel Group, already the owners of the Courtyard by Marriott on Whalley Avenue, acquired the hotel in 2007, they thought it was time for a face lift.
On a recent weekday the lobby was nearly empty as construction appliances whirred. There was only a hint of green on the walls — the new color scheme will be mostly blue. Upstairs the bedrooms were fresh and modern with Sealy mattresses, high definition TVs and wireless Internet access. The walls will be decorated with artwork depicting scenes of Yale. The hotel is adding about 25 rooms and revamping its restaurant. Cohen, a co-founder of the Newport Hotel Group, said the property should fully reopen on June 1.
Newport Hotel group has already revitalized one property in New Haven. When the company bought the property for the Courtyard by Marriott in 2000, the building was a Holiday Inn also in need of a renovation. Even after it got one, it could not shake its reputation of being poorly maintained, said Cohen.
In 2004, it was converted into a Courtyard, and in 2007 the property began a 47-room expansion, completed in 2009.
At the time the Newport Hotel Group decided to expand the hotel, it looked like demand was going to grow, Cohen said. Plans were underway for new medical facilities and other new developments from the University and the city.
“It appeared that New Haven was on the upswing,” Cohen said. “Because of that there would likely be more demand in the future.”
But now, the outlook is not quite as promising, Cohen said, and business has declined. Cohen explained that overall room sales in his properties has been down 20 to 30 percent since last year.
COMPETING FOR BUSINESS
While Cohen has seen a dip in business in his hotels, local hotels are faring better than their competitors in the region.
Ginny Kozlowski, executive director of Regional Growth Partnership, said the New Haven-Waterbury region fared better in occupancy rates than New England in February, even though they were both slightly below the national average.
Projects that have opened in recent years, such as the Smilow Cancer Hospital, are bringing people to the neighborhood, Kozlowski said, adding that visitors come regularly to the numerous institutions of higher learning in the area, including Quinnipiac University, the University of New Haven and Albertus Magnus College. Gateway Community College, too, has started work on a new downtown campus.
In addition to the medical facilities, Yale draws tourists through its art galleries and events, while athletic competitions and corporate gatherings also promise a stream of visitors, Kozlowski said.
“Education and medical isn’t going away,” she said. “That helps keep the region stable.”
But as the New Haven Hotel aims to become more upscale, it must compete with its neighbors, the old guard Omni Hotel and new kid in town, the Study.
At the beginning of last school year, the Study opened on Chapel Street with the intention of putting “a more upscale product on the market,” owner Paul McGowan said. Now in its second year of business, McGowan said his hotel is hoping to stabilize its occupancy rates and capture a steady piece of the market. McGowan has seen “more activity” this year, but he said he is unclear whether that is a product of the market or of the name recognition for his hotel.
While the Study offers a fresh alternative for travelers, the Omni has focused on attracting large groups of visitors at a time. General Manager of the Omni Leo Chandler said the hotel’s strategy has been to bring different groups of people, who might be considering other places for a function, to New Haven.
The Omni’s size serves as its advantage, as the facility features 22,000 square feet of meeting space, compared to less than 5,000 at the Study.
Chandler said the Omni’s occupancy rates are at the same level as last year’s and that he hopes to see them rise again in 2011.
“We’re always selling New Haven,” he said.
Still, the Omni will undergo a renovation of its own, performing a routine update to its lobby, guest suites and corridors over the next two years.
The New Haven Hotel, however, still counts on attracting travelers who might not have stayed there with its swankier facilities and central location, Cohen said.
But as the New Haven Hotel reemerges on the local scene, the chance of another competitor springing up remains in question. With fate of the 205 Church St. project uncertain, the city is considering whether now is the time to invest in a new hotel.
“It’s a tough project to get done right now,” Economic Development Administrator Kelly Murphy said.
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