Three Spanish hotel groups have opened debut properties over the past year in New York City and executives said the launches bode well for further expansion into the U.S. market.
MADRID—Leading Spanish hotel chains are entering the fiercely competitive Manhattan hospitality market, and so far, so good, according to executives of three of the companies which have opened properties there over the past year.
Two of the chains, Meliá Hotels International and Riu Hotels & Resorts, have been active for several years in Florida and have now debuted in New York City. The third operator, Iberostar Hotels & Resorts, opened the Hotel Iberostar 70 Park Avenue property as its first foray into the United States.
Iberostar Hotels & Resorts
John Long, VP of sales and marketing for North America at Iberostar, said New York City is a market that sees the highest level of tourism and is a natural fit as the company’s first stop for development in the U.S.
"A major factor in the decision had much to do with being located in the heart of a major metropolitan city surrounded by globally known attractions," Long said. "The hotel's location and features are unbeatable."
Situated in a refurbished brick-and-stone structure dating from the 1920s in lively midtown, the 205-room hotel has registered an average occupancy rate of 86% since its opening in June, which Long described as perfect timing.
"It afforded maximum exposure to key market segments such as leisure and corporate travelers alike (and) the fourth quarter is always a prime time for visitors to New York City," he said. "This opening is the result of Iberostar's expansion process which continues into the segment of city hotels."
Although New York City is a major tourism destination for Spanish visitors, Long said the new property does not specifically target the segment.
"Our primary focus is on U.S. customers because of the great potential,” he said. “In our Caribbean hotels, the American, Canadian, European and Latin American markets are key, and as such, we intend to capitalize on our strong following and customer loyalty."
Long added that Iberostar has a repeat business rate of 42% and the company hopes guests familiar with the chain's Caribbean resorts will follow the brand to New York City.
Analysts say hotel chains venture into what is considered the premier global "billboard market." This is due to a number of factors, such as the prestige of being present in what is arguably the most important city in the world, and the consistently high room rates compared with other major cities despite what some experts say is an oversupplied market.
Riu Hotels & Resorts
For Riu, the move into Manhattan is part of the shift away from their traditional focus on seaside resort properties mostly in Europe, Africa and the Caribbean, and towards the urban hotel sector.
"Being in one of the best locations in the world's main city will definitely launch our brand's awareness and prestige," explained Ivan Garrido, VP of sales and business development at Riu Plaza Hotels, the group's urban property arm.
"This is a dream come true for our CEO and owner, Luis Riu Güell,” Garrido said. “It took nearly ten years to find the most appropriate opportunity to invest in the right location in New York in addition to the three years and $310-million investment in the project, our largest investment to date."
That investment has proven to be a wise move so far with Garrido describing occupancy levels as “very good” since the property opened last Easter.
"New York is a city with fierce competition but we feel we have a very well-defined product and a prestigious reputation in the vacational holiday segment as well as excellent relations with tour operators and clients," Garrido said.
The 600-room Hotel Riu Plaza New York Times Square is the latest of the brand's half dozen city hotels in Dublin, Berlin, Miami Beach, Panama City and Mexico City, with executives looking for further opportunities in Paris, London, Madrid, Singapore and Hong Kong.
Riu Plaza Hotels was launched in 2010, joining the company’s other three resort brands Riu Classic, Riu Palace and Riu Clubhotels present in 19 countries from Aruba to Sri Lanka.
"We expect to open more Riu Plaza hotels in the United States in the future," he said.
Meliá Hotels International
Expansion in the U.S. market is also in the sights of Meliá Hotels International, Spain's largest hotel group with 350 hotels in 40 countries. The company opened the 313-room Innside New York NoMad in the city's Chelsea neighborhood in March 2016.
"Our performance so far has been excellent and although January and February were slower months, we anticipate occupancy to return to between 86% and 90% in March," said Innside New York NoMad GM Alex Spektor.
"I've opened three other hotels and we had a rapid ramp-up period in the first six months with occupancy above our expectations," he added.
Meliá’s Innside brand represents what the company calls "a fresh and sophisticated choice for business travelers seeking a lifestyle touch" that Spektor argued is perfect for sophisticated visitors to New York City.
"We see the hotel as a destination for 'work trippers', people who are combining business and leisure during their stay,” he said. “We felt this niche has not been filled properly in New York.”
Spektor said concerns about an oversupply problem in New York City are overblown.
“We're seeing increasing numbers of overseas visitors and a lot of the New York hotel inventory are older properties which are being converted into condominiums, residential rentals or mixed use," he said.
Around 50% of the hotel's guests are European and around half of those are from Spain, which the GM said reflects loyalty on the part of the Spanish travelers.
"They find it comforting to find something they know from back home in New York City," he said.
Spektor explained that Meliá wants to follow with more of the group's brands in New York and suggested that the city could use several Me by Meliá-branded contemporary, urban properties which focus on wealthy millennials.
"Now that we are established on the U.S., East Coast in New York, Miami and Orlando, we are definitely looking at entering key U.S. business centers like Los Angeles, San Francisco, Washington, Boston and maybe Houston," he said.