The Ritz-Carlton in the NoMad neighborhood of New York City.
Seema Mody | CNBC
Marriott next week will open a swanky new Ritz Carlton hotel in Manhattan, marking a bet on the surge in luxury travel and the hopeful return of business travelers this fall.
“It’s got 10,000 square feet of meeting space, a 7,000-square-foot spa, and four food and beverage outlets. I think it’s uniquely positioned to take care of that pivot from leisure travel to business travel,” Marriott CEO Tony Capuano told CNBC on Tuesday.
The debut of the 108th Ritz Carlton comes as New York City is seeing a resurgence in tourists. The city saw tourism all but dry up in the early days of the pandemic when New York became one of the first epicenters of the outbreak. Now travelers are flocking back, and more developers are signing new deals.
“2019 was the best year in New York’s history. You had over 66 million visitors to New York. There’s a sense we’ll get back to about 85% of that this year,” said Capuano.
New York City hotel occupancy rates are currently the country’s third-strongest, at 83%, according to STR, a provider of hospitality analytics. The top two markets are Portland, Maine, and San Diego, California, with 85% and 84% occupancy levels, respectively.
New York’s rebound marks a strong reversal from the past two years when beach destinations won out.
“People just stayed away from downtown areas. They didn’t want to be around a lot of other people due to Covid … but that has reversed and I think we’re ready for the city vacation,” said Jan Frietag, Costar Group’s national director for hospitality analytics.
As hotel demand rebounds and inflation hovers at a four-decade high, per-night pricing has skyrocketed. The average cost to check in to a hotel in New York City is nearly $300 a night, up 20% from 2019 levels, according to STR.
Capuano said the higher rates are a sign that hotels are commanding pricing power — so long as they can navigate a challenging labor market.
“I think it’s sustainable if we deliver on that service. Obviously, one of the big challenges that the entire travel and tourism sector faces is a labor challenge. We continue to do everything in our power to make sure our hotels are staffed, our teams are trained. If we’re going to continue to experience this strong pricing power, we’ve got to deliver on service,” Capuano said.
The Ritz Carlton joins 11 other hotels that have opened in New York this year. Another 60 projects are in the pipeline with scheduled opening dates for 2022, according to STR.
“That is the highest pipeline in the country for any market,” Freitag said.
But hotel development continues to get tripped up by supply chain delays. The Ritz Carlton broke ground four years ago and is only now opening its doors, due in part to the pandemic and ongoing supply constraints that slowed down construction.
“It’s really hard to open when you want to open due to the ongoing challenges related to supply chain issues,” Freitag said.