NYC hotel boom could help ease room shortage

updated 3:35 p.m. ET Dec. 16, 2007

NEW YORK - While planning her vacation to New York, Lisa Werness was so horrified by the prices in Manhattan that she opted for cheaper lodging in Brooklyn — where she scored a room rate of just $400 a night.

"Don't remind me. I'm trying to forget about it," the Raleigh, N.C., resident said of the price shortly after checking in at the New York Marriott at the Brooklyn Bridge. "We're just kind of biting the bullet."

In a city where even residents often pay more than half their salaries for a place to lay their heads, visitors in need of lodging have long faced a shortage of hotel rooms and rising prices.

Now, with 8,500 hotel rooms under construction in the city — a growth of more than 10 percent — that crunch could ease ever so slightly in the coming months. By comparison, it took from 1998 to 2007 to make a leap of the same size.

"One of the challenges that New York has always had is having enough rooms for tourists," said Sean Hennessey, CEO of industry consulting firm Lodging Investment Advisors. "Most of the time the corporate travelers are willing to pay more than the tourists, and the tourists kind of get crowded out."

New York sees more overseas and domestic visitors than any other U.S. destination except Orlando, Fla., according to analysts at Global Insight Inc. But it has fewer hotel rooms than less-popular spots including Las Vegas, Chicago, the Los Angeles metro area and Atlanta, according to Smith Travel Research.

The resulting shortage leads many travelers seeking an affordable room to head far afield of the usual tourist draws, and hotel developers have taken notice, with new lodging under construction or recently opened in Brooklyn, Queens, the Bronx, Long Island and beyond.

Even with the weak dollar making his trip to New York a bargain, London resident Mike Jones still found the price tag on his Brooklyn hotel room shocking.

"All the hotels in Manhattan are pretty much full at whatever rate they want to charge," said the 56-year-old, whose travel agent advised him to a book a room in an outer borough because of the cost. "They're operating at pretty much capacity, and they can charge pretty much what they like."

Even when he decided to stay in Brooklyn for its cheaper prices, he ended up with a bill for close to $600 a night, he said, adding, "That's crazy."

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