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While Occupancy Skyrockets, NYC Hotel Players See Cause for Concern

Over the past several years, the unofficial motto of the New York City hotel market has been “If you build it, they will come.” The city has seen tens of thousands of new hotel rooms crop up across the city this decade, and there are tens of thousands more in the pipeline due to arrive in the coming years—but despite all that new supply, the rooms keep getting absorbed.

That’s undoubtedly good news for the hotel developers and operators who built those new rooms and plan on bringing more to the market in the near future. But a closer look at the statistics and conversations with hotel market participants reveal a more mixed view of the city’s hotel landscape—one that finds it attempting to strike a balance between the number of rooms sold and the prices being paid for those rooms, and bracing for a variety of headwinds that could make it hard to sustain future development.

The clear, undoubtedly positive story is that while the U.S. hotel industry has struggled recently—with declining tourism figures among the factors that have made it difficult to absorb the roughly 2 percent supply growth experienced nationally last year—New York City has shown little problem handling the 4 percent growth in its supply that it saw in 2017. As Jan Freitag, the senior vice president of lodging insights for data and analytics firm STR, put it, the city’s hotel market is experiencing a dynamic that “doesn’t make sense in any other market but does make sense in New York City.”

The average occupancy of New York hotels in 2017 stood at 86.7 percent, up 1.1 percent from the previous year—with the city now home to more than 119,000 hotel rooms across the five boroughs, according to STR. That 86.7 percent occupancy rate means that nearly nine out of 10 hotel rooms available in the city were sold out through the course of last year—a “stunning” figure given the added supply, Freitag said.

“What demonstrates the strength of the New York market is that all of those hotel rooms are being absorbed in the year that they open,” said Mark VanStekelenburg, a managing director in the hotels division at CBRE. “From an occupancy standpoint, the market is at or near its peak occupancy and is continuing to be, even while we’re experiencing 4 to 6 percent [annual] supply growth. We’ve never really seen something like that in the U.S.”

That should give confidence to the city’s hotel developers, given that room supply will only continue to grow in the next few years; STR tracks more than 22,000 new rooms presently in the city’s development pipeline, including nearly 12,000 that are presently under construction.

But while the city has shown an ability to absorb that kind of supply influx, the underlying economics of doing so—such as the daily rates those rooms are able to command and the revenues flowing into the pockets of hoteliers—are somewhat murkier.

Though hotel occupancy in New York has been on an upward trajectory, average daily rates have not; those slipped 1.4 percent to $255.54 in 2017, according to STR. Room rates in the city have continued to slide since peaking at more than $271 per night in 2014, as has the metric of revenue per available room (RevPAR), which has fallen 4.6 percent to $221.60 in that time.

Market observers attribute this inability to translate high occupancy rates to improved room rates and revenues to a number of factors. Some noted that most of the city’s new hotel rooms fall under the booming limited- or select-service category, where rates are on the lower end of the spectrum (such rooms comprise more than 6,000 of the nearly 12,000 rooms currently under construction in the city, per STR). Others cited the influence of Airbnb, which has forced hoteliers to re-evaluate the prices they ask of consumers who can now choose a cheaper, often more spacious lodging alternative.

Still, despite softening rates and the promise of even more supply to come, it’s not hard to find real estate players willing to bet on the hotel market’s continued viability.

“You can see from our commitment to the city hotel market that we’re still very bullish in our long-term view of hospitality investments,” Mitchell Hochberg, the president of the Lightstone Group, said.

Hochberg pointed to his development firm’s hotel projects around the city, such as its Moxy brand hotels in Times Square, NoMad and the East Village, as examples of Lightstone’s continued faith in the hotel sector. “New York is one of the strongest economies in the country, and it’s a global center for finance and media,” he said. “Although there’s been a supply increase in the last couple of years, the data indicates that demand has kept up with supply.”

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Guest room at the Pod Times Square Hotel. Photo: The Pod Hotels

But other hotel market players are far less convinced. Richard Born, the co-founder of BD Hotels and the hotelier behind boutique Manhattan brands such as the Mercer Hotel, the Greenwich Hotel, the Ludlow Hotel and the Jane Hotel, espoused his view that, “with some exceptions, by and large the hotel market in New York is terrible.”

He cited a combination of factors including the “erosion” of daily rates (which he attributed to the influx in room supply as well as Airbnb’s vast “shadow inventory”), higher property taxes and operating costs, and the increased influence of third-party booking websites like Expedia and Travelocity (which have brought more transparency and reduced hotels’ “pricing power” while also charging booking commissions that are an additional “line item” for operators).

“Any hotel operator operating today is making a fraction of their net operating income compared to what they were making 10 years ago,” Born said. He added that the operators best positioned to succeed in such a challenging market are the ones capable of differentiating themselves from the more malleable product of their competitors. “There’s a fungibility to the hotel market that makes pricing very difficult because everyone is looking at everyone else’s rates. But the exceptions are the hotels that are not fungible—the ones that are unique, designed and have something different to offer their customers.”

In addition to its higher-end boutique brands like the Mercer, Bowery, Ludlow and Maritime hotels—where rates are on the higher end of the pricing spectrum—BD Hotels has sought to differentiate itself from the landscape with projects like its Pod hotels, which have parlayed the micro-apartment trend into a concept the hotelier terms the “micro-hotel.” With four locations in New York and one in Washington, D.C., the Pod hotels offer nightly rooms of around 100 square feet but also come equipped with food-and-beverage concepts and boutique-minded aesthetics (such as the mural from Brooklyn artist JM Rizzi that adorns the elevator shaft at the recently opened Pod Times Square).

Born pointed to the Pod BK—the brand’s Williamsburg, Brooklyn location—as offering something specifically different from the new luxury hotels that have cropped up in that neighborhood in recent years, such as the Wythe Hotel and the William Vale. “We have a hotel that we don’t think is fungible, in a marketplace where all the hotels are four-star boutiques looking for high rates,” he said.

Hochberg cited a similar rationale behind Lightstone’s Moxy brand; the developer teamed up with Marriott International with the goal of “delivering an affordable product with a lifestyle component to it”—one that offers the sensibilities of a boutique product at a lower price point with smaller rooms and limited-service offerings.

“The industry has introduced many more products and choices for the consumer of the past few years,” Hochberg said. “There’s a whole variety of new genres and brands that are focusing more on the consumer and trying to understand what today’s consumer is looking for.”

Hoteliers may also receive a boost from the fact that, beyond this decade, the city’s hotel development pipeline is slated to slow down significantly, making it easier for the incoming supply to be absorbed and potentially driving up room rates again.

Multiple market observers and participants noted that the supply influx the city is now seeing is the result of plans initiated a few years ago, adding that a variety of factors—from risk-averse lenders shying away from financing new projects to regulatory pressures being placed on the hotel sector by the de Blasio administration—could slow future development significantly.

“When we go out to find financing, there are less people able to provide debt than there were before,” said Eastern Consolidated’s Adam Hakim, a managing director in the brokerage’s capital advisory division. “Lenders control supply and demand; when they give hotel developers money, people build hotels, and when they don’t, they can’t.”

Hakim’s colleague James Murad, a director at Eastern, described the hotel market as “one of the thinnest construction financing markets you can go out for” to procure funds, with lenders mindful about the sheer volume of new supply and how that may affect borrowers’ abilities to refinance in the future.

“That said,” Murad added, “for quality sponsors and the right product, there’s appetite.”

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Guest room at the Wythe Hotel in Williamsburg. Photo: Matthew Williams

Jared Kelso, a senior managing director in  Cushman & Wakefield’s global hospitality group, echoed that sentiment. “The last 24 months have been very challenging to find construction financing [for hotels],” he said, attributing the slowdown to lenders being in a “checklist underwriting” mind frame in considering hotel market fundamentals.

But Kelso added that financing is still available to “sponsors with a long and proven track record” with debt funds and alternative lenders also stepping in to fill the void left by the more risk-averse banks. He also noted that the tightening of the financing market is “frustrating for developers but not a bad thing at large” given the impact it will have on restricting supply. “After 2018, the supply pipeline thins dramatically, and that will ultimately be a good thing for the [hotel market] at large.”

And then there are regulatory obstacles that market observers say will impede hotel development in the future. That includes the de Blasio administration’s proposal to limit projects in industrially zoned M1 manufacturing districts by requiring developers to obtain a special permit, as well as the extension of Local Law 50, which prohibits large hotels (150 keys or more) from converting more than a fifth of their rooms to residential units or other non-hotel uses without city approval.

Both measures are perceived by many observers as meant to preserve the interests of the influential hotel workers’ unions and potentially damage the city’s future hotel supply. In the case of the zoning proposal, it will make it harder for developers to find parcels to build on and likely subject those projects receiving a special permit to higher-cost union labor requirements; in the case of Local Law 50, its preservation of existing hotel rooms would dampen the need for new supply in the interest of preserving existing hotel jobs.

According to Hakim, some of the developers behind the current supply pipeline—such as prolific hotel builder Sam Chang of McSam Hotel Group, a client of Eastern’s—are operating on the “thesis that hotel values are going to go up significantly in the next few years. The inventory is going to stabilize, and once it stabilizes, the theory is that you won’t be able to build new ones.” (Chang did not return a request for comment.)

“Twenty-four months from today, in 2020, I think your pipeline of hotels is going to drop to pretty close to zero,” Hakim added. “From there, you’ll see an increase in [room] prices.” But he was also critical of the influence that the current regulatory environment has had on exacerbating this dynamic. “I believe markets should correct themselves properly; you have a lack of [financing], and that’s a correction you’re seeing. But public policy and zoning laws being arbitrarily changed—that’s not how it should work.”

The de Blasio administration, for its part, does not think the proposed zoning regulations will negatively impact the flow of new hotel projects in the city. “We don’t believe the proposed rules will hinder hotel development across the city, which remains strong,” a mayoral spokeswoman said in a statement. “But we do aim to prioritize manufacturing businesses in the zones specifically designated for manufacturing. While hotels have a lot of options for where they can open and operate, these industrial firms don’t.”

The impact of all these various influences could start making themselves felt sooner rather than later, sources said. C&W’s Kelso said that the brokerage believes New York City room rates could start ticking upward as soon as the fourth quarter of this year, while Hochberg said Lightstone projects RevPAR “to be flat to slightly increased in 2018.”

That would be good news for hotel operators in the city—and a testament to its voracious appetite for hotels. Despite all the new supply, the city’s churning economy and robust tourism sector seems to always make room for even more places where people can stay.

“It’s a cultural mecca for the world,” Born said. “Every 14-year-old lives on a handheld device, looking at all this and dreaming of coming to New York, whether you’re in Oklahoma or Bangladesh, to live, work, study and visit here. It’s always going to be a dynamic place for tourism—the issues are going to be the costs of operating and the supply. But we do live in the greatest tourism market in the U.S. and in the world.”

Source: commercial

Rob Speyer’s Greatest Hits as REBNY Chairman

Five years makes a big difference. If one were to hop in a time machine and zoom back a half decade, it would almost feel like a Futurama episode of a parallel universe.

Having been hit by Superstorm Sandy, a lot of the coastal parts of New York City were in shambles, and thousands were still reeling from the devastation. President Barack Obama was gearing up to begin his second term, while Donald Trump was penning an op-ed on CNN’s website championing, “We will have to leave borders behind and go for global unity when it comes to financial stability.”

During that time, Rob Speyer, the real estate scion of Tishman Speyer, became the chairman of the Real Estate Board of New York. With his term having ended at the close of 2017, Commercial Observer took a look at his tenure over the last five years at the helm of the 122-year-old body.


January—Speyer, the president and co-chief executive officer of Tishman Speyer, starts a three-year term as REBNY chairman (it is later extended for two more years). He becomes the youngest person to steer the organization. His father, Jerry, was chairman from 1986 to 1988 and oversaw the appointment of Steven Spinola as president in 1986. The younger Speyer works with Spinola until his retirement.

November—Mayor Michael Bloomberg’s administration withdraws a proposal to rezone Midtown East for taller new commercial buildings, after failing to gain support from the City Council.


cdcmyk Rob Speyers Greatest Hits as REBNY Chairman
The Rob Speyer CD. Illustration: Kaitlyn Flannagan/For Commercial Observer.

January—New York City Public Advocate Bill de Blasio succeeds Bloomberg as mayor.

December—Speyer leads the search to replace Spinola as president of REBNY after his nearly 30-year run. The organization announces Consolidated Edison Vice President of Government Relations John Banks will be the next president.


January—Obama signs an extension through 2020 for the Terrorism Risk Insurance Act days after Congress approves it. REBNY supports the extension of the program, which was created in 2002 following the World Trade Center terrorist attacks. It provides compensation for “certain insured losses resulting from a certified act of terrorism.”

March—Banks becomes president-elect during a transition period to replace Spinola, who will step down at the end of the year.

June—The 421a tax abatement program expires. About a week later Gov. Andrew Cuomo announces the renewal of the program for six months with the caveat that for a longer renewal REBNY and the construction unions will have to come to an agreement about prevailing wages.

September—Speyer becomes the lone CEO of Tishman Speyer after sharing the title with his father since 2008. The younger Speyer also retains the president role, while his dad, a co-founder of Tishman Speyer in 1978, keeps the title of chairman.


January—Talks between REBNY and the Building and Construction Trades Council of Greater New York break down and 421a officially expires without an extension.

January—REBNY’s membership exceeds 17,000 real estate professionals, an all-time high for the then 120-year-old organization.

August—After breaking tradition and giving Speyer a fourth year as chairman in 2015, the board of governors approves Speyer for a fifth year.

October—New York State enacts legislation (supported by REBNY) that makes it illegal to advertise short-term rentals in multifamily buildings, targeting Airbnb and similar actors.

November—The construction unions and REBNY agree on a benchmark labor wage for construction workers, fulfilling the prerequisite to revive 421a.


April—421a is reborn as Affordable New York after it passes in the state budget. The legislation allows a tax break for 35 years if developers of market-rate rental buildings with 300 or more units in certain neighborhoods set aside 25 to 30 percent as affordable units and pay construction workers an average hourly rate of $60 in Manhattan and $45 in Brooklyn and Queens.

June—William Rudin, the CEO and co-chairman of Rudin Management Company, is selected to succeed Speyer as the next REBNY chairman.

August—REBNY launches its newly syndicated Residential Listing Service. The long-planned RLS allows salespersons and brokers to send listings to a network of real estate listing websites through one centralized feed.

August—The City Council passes the Midtown East rezoning, which will amplify developers’ ability to construct taller commercial buildings along 78 blocks from East 39th to East 57th Streets and Third to Madison Avenues.

September—Despite heavy pushback from REBNY over a new bill that increases safety training for construction workers, the City Council votes unanimously in favor of it. In a statement, REBNY says it supports more safety training but criticizes the legislation for failing to address the trade organization’s concerns about its implementation and costs.

December—Speyer ends his five-year tenure, the second-longest consecutive term behind Bernard Mendick (1992 to 2001).

Source: commercial

After Settling Airbnb Suit, Salim Assa Sells West 55th Street Building for $50M

Fresh off a $1.2 million settlement with the city for alleged illegal Airbnb rentals, landlord Salim Assa has sold one of his Midtown residential buildings for $50 million, Commercial Observer has learned.

Assa Properties has unloaded 19 West 55th Street to Abraham Leifer of Aview Equities in a sale that closed last week, according to a press release provided first to CO from Assa’s firm. The fully leased, nine-story building between Fifth Avenue and Avenue of the Americas has 7,600 square feet of retail space and 23 rental apartments that include both market-rate and stabilized units.

Meanwhile, the beleaguered developer will hold onto 15 West 55th Street, the attached residential property next door anchored by Italian fashion designer Domenico Vacca’s clothing boutique. The two buildings together used to be known as “The Branson,” a pair of rent-stabilized properties that Assa acquired for $60 million in 2013. He then revamped both buildings for $18 million and leased the 14,600-square-foot retail space at 15 West 55th to Vacca.

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A renovated kitchen at 19 West 55th Street. Photo: Douglas Elliman

The release claims that the properties were “only 25 percent occupied” when Assa acquired them but are now “substantially leased.”

The sale isn’t related to the settlement, according to Assa’s spokespeople. As part of the deal he struck with city a day ago, Assa is required to hire property managers to oversee 15-19 West 55th Streets as well as two other buildings in Hell’s Kitchen. But the new owners of No. 19 will be exempt from that rule.

“Since we purchased this portfolio, Assa Properties has made the investment to bring the properties to their current first-class state, matching the premium location in the center of Fifth Avenue’s luxury retail corridor,” Assa said in a statement. “We’re thrilled to offer this prime opportunity with 19 West 55th Street.”

Source: commercial

GFI’s Allen Gross Talks Downtown and the Old-Time Vibes at his Beekman Hotel

Below the room’s expansive sunlit atrium, Allen Gross surveyed the sumptuous lobby of the Beekman one morning last week with the abiding ease of a master of delayed gratification. Munching on a muffin from Temple Court, Tom Colicchio’s lobby restaurant, Gross recounted walking past this venerable old building for years before winning the chance to develop it.

But the native New Yorker who founded and still presides over GFI Capital Resources Group has never minded taking his time. On the way to amassing a residential portfolio that controls 16,000 apartments throughout the country, Gross detoured into law (he has a degree from New York University) and finance before discovering he had the makings of a decent developer.

For nearly 40 years, Gross, who through a spokesman declined to give his age, has thrived as a creator of condominiums, including sold-out towers in Brooklyn’s Williamsburg and Greenpoint and Manhattan that he manages from his City Hall-area offices. That gave him plenty of time to dream about what might be in the terra-cotta, renaissance-revival building he walked past every day—built in the 1880s.

Last August, his patience paid off when the hotel he’d long envisioned there quickly became the city’s most talked-about opening of 2016. That its interior earned notice as a paragon of design was no surprise. At his other Manhattan lodgings—the Ace Hotel and the NoMad Hotel, in Midtown South—Gross had made winning those plaudits routine. The popularity of the adjacent condominiums, the Beekman Residences, marks for Gross the icing on the cake.

But if you’re an out-of-towner who’s bedded down at Gross’s lodgings in the past, rest assured that his newest is not just more of the same. For one, you’ll want to consult your subway map—the Beekman, at 123 Nassau Street, is a bit farther downtown than the last New York hotel you visited.

For another, this design is one that worships the historic building it occupies. From the way Gross lovingly peels back the corner of a rug to show off the 130-year-old tile underneath, it’s clear that he does, too.

Commercial Observer: When the Ace Hotel opened on West 29th Street and Broadway in 2009, all these New York cool kids adopted the lobby as a place to just hang out. What goes into making a space with that kind of cachet?

Allen Gross: In reality, we were the first WeWork, if you think about it. The biggest challenge of the Ace was, Who’s going to go to that part of town? When you walked down there, you saw people walking around with big black garbage bags selling knockoffs [of handbags]—that, and a couple of homeless people. So how do you get people to come to someplace off the beaten path? The whole idea of the lobby was to give people a place to enjoy themselves. Once you have a herd mentality, more people come.

I know you went out and found some great collaborators.
The idea was, let’s take 50 out-of-work artists and let them design the rooms. Let them do the artwork. And we mixed that with great food and beverage.

Wasn’t dining one of the hotel’s main draws?
One of the most popular restaurateurs at that time was April Bloomfield from the Spotted Pig. We brought her into the building and showed her our vision for what we would create. The worst thing is when I travel and see a restaurant and nobody’s in it—I don’t want to eat there. When you see a packed restaurant, that’s where you want to eat.

And coffee brought people in, too, didn’t it?
We set up Stumptown [Coffee Roasters], which no one had ever heard of before. It was the first Stumptown anywhere outside of Seattle. It was nowhere! There was never a Stumptown. To this day, people are still standing on line for that coffee because it’s probably the best coffee.

And now eight years later, here we are at the Beekman, two miles farther downtown. What brought your attention to this neighborhood?
My office has been down the block from here since 1991. Many times we wanted to do something Downtown, but every time we started getting involved, something happened. Either it was an economic downturn, or it was 9/11. Something always happened. We really didn’t feel that this was a location that was going to evolve. No one ever stayed here on the weekends. It was a four-days-a-week business.

When did that start to change?
After 9/11, you have a rebuilding process. You have the 9/11 Memorial, which is probably the No. 1 tourist attraction in the world. Now go to Fulton Station. You have the PATH and you have [many] subway lines. And then for retail, you have Brookfield [Place] and Westfield [World Trade Center] down here. I looked at that, and I said, “It’s coming.”

How did this particular building, at 123 Nassau Street, catch your attention?
The building closed down about 30 years ago, and it was just lying dormant. There were about 200 people who wanted to develop it. But nothing happened. They couldn’t make it work because it was a landmarked building and there’s so much involved. Not only do you have to have a design, but it’s got to work economically. Nobody could make it work.

What were the constraints?
The maximum you could have gotten in here was 130 rooms. That’s not very efficient. Second, where do you put all the mechanicals? You can’t put it on the roof because it’s a landmark building. So where do you put it? Have you ever tried messing around with a 130-year-old building? The bottom line is, everybody else walked away from this deal. It was like the pink elephant in the room. All of a sudden it hit me: The only way to make [the Beekman] work is building a tower next to it and put in condos to bring down the construction cost per room. We were successful in getting the lot next door [at Five Beekman Street], and we built a 650-foot building of which the first 11 floors are part of the hotel. You now have 287 rooms, which is efficient. And the mechanicals are located in that tower.

How does that work?
In the old building, there’s nothing other than a circuit breaker box. Everything—all the juice, air conditioning, all the water, all the gas—emanates from the new building. It was cost efficient because it was new construction. And we dug down two floors and put the back of the house there, so we didn’t have to touch this historic building except to beautify it. It doesn’t hurt that we were able to get $28 million in tax credits, which was a feat unto itself.

Tell us about the interior.
What I wanted when I looked for designers was somebody who was going to design not about themselves but about the building. I had one designer that was going to fill the atrium with flying birds made of crystal. I said, “Why do I need anything in the atrium? Let’s make it about the atrium!” I was very lucky to find a designer in Martin Brudnizki who really saw the vision that I saw.

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The lobby of The Beekman Hotel. PHOTO: Robert Paul Cohen for Commercial Observer

What role does the building’s history play in the design?
We designed every piece of furniture. Every light that you see was custom designed. It was all studying that era and making sure that we got everything right. The pictures on the wall—people think they’re just nice pictures. That’s Edgar Allan Poe [pointing to a wall-hung portrait]. All the pictures are people who were around in those times. The whole concept is you come here for the weekend, it’s as if you walked into the 1880s. As if you went into a time machine and you actually lived in that era.

Your collaborators at the Beekman aren’t too shabby, either.
We brought two of New York’s finest restaurateurs, Keith McNally and Tom Colicchio. There’s never been a hotel that’s had two restaurateurs in one building. No one could convince them to do that. I brought them here on a cold day, and we sat and had a cup of coffee right in the middle of the atrium. They sat here and said, “We’re not both going to do it. You’re going to have to pick one of us.” I said, “Guys, look up [at the atrium]. Don’t miss this opportunity.” And they got it. [Having both of their restaurants] has been a dream. The food and beverage revenue that we’ve earned is double what we programmed for. It’s like crazy.

Hotel rates and occupancies in New York have been down a bit of late. How has that affected your business?
It affects everyone’s business. My business is great when everybody’s business is great. Competition is good. They ask, “Aren’t you afraid of the Four Seasons?” I say, “No, that’s good for me!” The Four Seasons means that the neighborhood has arrived.

You don’t bat an eye at other hotels moving in?
It’s like anything else in the world. There are too many restaurants, but the good ones always make it. A lot of it has to do with where the lenders are. As long as the banks are going to pay for people to put up Holiday Inns or Marriotts, they’re going to build it. It’s a simple thing.

Is there a fear that some younger travelers might favor Airbnb or other nontraditional lodging?
What is it with millennials? They’re all unhappy, and they don’t want to do anything that requires any work. “I don’t want to talk to anybody, because I only text!” Their parents told them that they’re special, and everybody told them that they’re special, and guess what? They might find out they’re not so special. My granddaughter who graduated high school told me they had 49 valedictorians. It’s not funny!

Fortunately, no one was ever quite so generous to me.
I was asked by Equinox Hotels, “Do you have an idea for us?” I said, “Yeah, you want to be the most successful hotel? Create virtual-reality exercise.” You can lie in bed, put something on your head and tell it you want an hour of exercise, but that you want to rest while you’re doing it. It would be an instant hit. People just want instant gratification.

It sounds like you think people are losing sight of the value of hard work.
You have to work. That’s what everybody misses. It’s not the money that you earn; it’s the road of getting there. At the Beekman, we have a thousand problems every day. When we finished the lobby, a pipe burst and flooded the whole floor, and we had the opening in 48 hours. But that’s what happens with construction. You have to work through it. That’s the gratification.

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Allen Gross. PHOTO: Robert Paul Cohen for Commercial Observer

Are you a lifelong New Yorker?
I’m Brooklyn born and raised. That’s why my office is Downtown. It has to be a 20-minute ride to work because I work very late and I come in very early. That’s the only luxury I allow myself. I still live in Brooklyn. Forty-two years in the same house.

Earlier in your career, you were a lawyer, and then you owned a mortgage-banking company. Were those necessary steps on the way to your work as a developer?
When I was a lawyer, I represented 17 developers. I learned the construction business from representing developers. No less important than learning finance. That’s the process: You become who you are through life experience. Everybody can make mistakes, but you have to make the mistake, learn from it and not make the same mistake twice.

Are you a traveler yourself? Do you enjoy staying at others’ hotels?
No, not really. I’m not a big traveler, and I don’t like staying in hotels quite honestly. I’m a very bad sleeper, sleeping alone, so I try to keep away from it. But I do go visit before I hire [a collaborator]. Before I hired [interior designer] Jacques Garcia for the NoMad Hotel, I had to go see his hotel in Paris to get a feel for him.

You don’t enjoy trying on the guest experience?
We own restaurants with probably the best chefs in the city of New York, and I’m proud to say I haven’t eaten in any one of those restaurants.

Why not?
Because I’m kosher! But I’ve spent time in every one. The funniest was with Antica Pesa [at 115 Berry Street, Gross’s condos in Williamsburg]. It’s probably the best restaurant in Rome, and I had to bring them to New York. They always used to say, “When are you coming to eat in our restaurant?” I said, “I’m trying to explain to you, I’m an Orthodox Jew!“

Ah. It got lost in translation.
The chef pulled out his iPhone and Googled the words “observant Jew.” Finally, he showed me a picture of the Pope holding a box of his pasta. He said, “If I can cook for the pope, why can’t I cook for you?” I asked him what this had to do with me. He said, “Well, the Pope wears a yarmulke, and you wear a yarmulke!”

Under the Trump administration, many people have talked about the country turning inward, perhaps less welcoming to foreigners. Has that affected tourism?
No. To the contrary, when I came in today, I saw 20 people in the lobby, all foreigners. Where do you live? Do you keep your doors open at night?

I don’t.
You have people born evil, people born stupid. You have all kinds of people walking in the world. We cannot be politically correct all the time. Eighty percent of the people who use emergency rooms are illegal aliens. Go ask any doctor.

You’ve raised money for your businesses in Israel. Is that due to your personal connection to the country, or does it make financial sense for a different reason?
The reason is that I’ve learned the financial system there. To me, I love going there, and my kids have all been there. But I never told my kids, ever, that they have to be Orthodox. All I did was show them that it’s a beautiful way to live your life. If you can’t appreciate it—that it’s a life of family—and if you don’t understand it, then you can’t live it.

How do you get guests to come back for a second visit?
For example, a lot of hotels will give you free breakfast, but when you bring in a guest, they hit you for $30, $40, whatever. Why not let them beat you? Let them feel that they beat you. So they snuck someone in—who cares? When they come back to stay again, I’ll know that instead of giving $30 to Hotels.com, I gave it to them.

Sounds logical enough.
At the Ace Hotel, we put in iPads. Everybody said, “Aren’t you scared they’re going to be stolen?” To the contrary: I hope they steal them! It’ll just get added to their bill, and I make $60 profit on each one. It’s not a bad thing!

Source: commercial

City Sues Alleged Illegal UWS Hotel Operator

Source: commercial