Hersha agreed a year ago to buy the Hyatt Union Square, being built at 13th Street and Fourth Avenue, for $104.1 million, or $595,000 a key. The REIT expects to complete the purchase of the hotel, with three dining venues and a rooftop lounge, when construction is finished later this year. It plans to choose retail tenants closer to the opening, basing its decisions on rental income and neighborhood demands, Shah said.
In Washington, Hersha is completing the redevelopment of Capitol Hill Hotel, including the addition of 6,000 square feet (560 square meters) of salon and club space for guests as well as local residents, businesses and government officials, according to Shah. The hotel also rents space in the property's salon to a local artist.
In March, Hersha completed the purchase of Philadelphia's Rittenhouse Hotel, where the company plans to convert the "underperforming" bar into a venue that locals will be able to rent for special events, Shah said.
During and in the immediate aftermath of the recession, hotel operators focused on cutting costs as travel demand declined. Revenue per available room, an industry measure of occupancies and rates, slumped 24 percent in 2009 at luxury hotels, which were hurt the worst of any industry segment.
Reductions spanned from spending less on buffets to lowering swimming-pool temperatures, Andrew Cosslett, former chief executive officer of InterContinental Hotels Group, said in an August 2009 interview. Now, lodging companies are focused again on increasing revenue.
Last month, Starwood Hotels & Resorts Worldwide Inc. announced plans for the $100 million renovation of 10 W hotels in North America, including locations in New York and San Francisco. The revamp will entail the reworking of public spaces such as lobbies, bars and nightclubs, with a focus on "drawing in locals," the hotelier said in a June 4 statement.
"Maximizing every piece of real estate, especially at new hotels, is a growing trend as institutional and public ownership of hotels in major urban markets is on the rise," Loeb, the Baird analyst, said in a telephone interview.