How Gentrification Powers New York City’s Tourism Industry

The complicated relationship between tourism and the U.S.A.'s most popular urban destination.

For all of New York City’s iconic grandeur, financial largesse, and outsized presence in global media, the rapid pace of change has made it hard to pinpoint the true nature of the forces defining the future of the city.

While millions of New York’s residents live in the outer boroughs, often working in middle-class jobs or service industries, Manhattan and the more expensive parts of Brooklyn have gradually become defined by the kinds of people they exclude and the types of upscale businesses they attract.

Massive skyscrapers touting luxury condominiums have spread from the area around Midtown Manhattan up toward Harlem and down through the Lower East Side into the Financial District. Chain stores, restaurants, and banks have taken over storefronts that were long inhabited by local entrepreneurs. Buildings once used for manufacturing have been converted, quite often, to hotels and office space.

To those who lived in New York City before or during its era of civic chaos in the 1970s, and even the boom-and-bust 1980s, the city is almost unrecognizable in its ostentatious wealth and newfound safety in many neighborhoods.

Tourism exerts less of an economic force than industries like finance, tech, and health services. Yet these industries, in addition to a vibrant cultural scene, bring an increasing tide of both leisure and business travelers. Tourism has a strong effect on the daily life of New York City’s population and the neighborhoods in which they live. Perhaps most powerful of all, the hospitality industry in the five boroughs represents one of the fastest growing fields of employment for less skilled workers and a route to economic advancement for many left behind by the city’s high-tech and creative industries.

Hospitality and food service now represent the sixth largest industry in New York City, and have added more workers than any industry since the Great Recession began in 2008. In 2014, tourists spent more than $81 billion when visiting New York City, according to the city’s tourism marketing agency NYC & Company.

The forces of tourism and globalization in New York City have driven the city to evolve; it’s part big business, part gentrification, and reflects the globalization of both culture and tourism on the world stage.

Skift spoke to more than a dozen New York City leaders in academia, tourism, hospitality, and media to gain a window into the forces that have helped drive the growth of tourism in America’s top gateway city. What we found was insight into the economic forces that have helped shift the Big Apple’s economy toward service industries, as well as the role of real estate investment in the steep rate of change in many neighborhoods.

Big Picture

Visitation to New York City, both domestic and international, has skyrocketed since the September 11 attacks led to a severe economic and touristic downturn. The latest forecast from NYC & Company pegs 2016 as a record year for visitation: 12.65 million international visitors and 47.6 million domestic visitors, totaling 60.3 million.

This represents a 67 percent increase in total visitors since 2000 and a 24 percent increase since 2010. To put this in perspective, New York City’s population of 8.5 million has increased just six percent since 2000.

Gentrification has made more New York City neighborhoods more appealing to many visitors, bringing tourists and businesses catering to tourists to neighborhoods that weren’t used to them. As real estate prices have risen, investors and developers are putting their money into the most high-yielding possible assets: hotels.

“I always say tourism is incredibly beneficial but it can also be very impactful, very negative, and I think it's really upon us in the tourism industry to ensure that we're doing the best that we can to make sure that tourism isn't a destructive force,” said Dr. Kristin Lamoureux, associate dean of the NYU School of Professional Studies Tisch Center for Hospitality and Tourism. “Certainly, tourism shouldn't be detrimental to the communities which it is in, and it doesn't really matter if that's New York or Botswana. It's the strength of the regulation and the planning that goes in that really speaks to how much tourism can change a destination. The reality is, though, is that it isn't often tourism in a vacuum. Nice places to live are nice places to visit.”

It would be foolish to say that tourism has touched every New York neighborhood in a similar way. Neighborhoods like Brooklyn’s Bedford-Stuyvesant, which has recently been beset by the forces of gentrification, faces a glut of homesharing listings driving up prices for renters and flooding the neighborhood with visitors. In Williamsburg, bolstered by its proximity to Manhattan and reputation as an international hipster mecca, inflated property values have pushed out the creative class that helped popularize the neighborhood in the first place.

When any city undergoes an unprecedented tourism boom, one of the biggest potential pitfalls is a lack of available hotel rooms; check out our recent deep dive on the trouble Iceland is having in Reykjavik following its wholesale economic shift towards tourism. Yet in a more developed city like New York City, a side effect of torrid economic growth is often speculation and explosive change that works to rearrange life for locals to provide a more compelling experience for high-spending visitors.

Tourism is incredibly beneficial but it can also be very impactful, very negative, and I think it's really upon us in the tourism industry to ensure that we're doing the best that we can to make sure that tourism isn't a destructive force.

Dr. Kristin Lamoureux

“The Manhattan hotel investment market achieved a record breaking year in 2015 with hotel transaction volume exceeding $6.6 billion, representing 160 percent growth over 2014 hotel transaction activity,” states a June 2016 report on the New York City hotel market from Jones Lang LaSalle. “This more than doubled the previous record of $3.1 billion achieved in 2011 and surpassed the combined investment activity of the next five largest U.S. hotel transaction markets… Within the broader Manhattan commercial real estate sector, 2015 was by far the most active year on record with 589 recorded sales totaling $60.3 billion — a near 50 percent increase in volume year-over-year.”

After more than six years of robust hotel development, however, there has been something of a trend toward building cheaper properties with fewer services and a limited experience for guests. The move toward select-service properties is partly driven by changes in traveler demands, but also represents the economic reality of hotel investment in an area where buildings represent costly, and valuable, financial assets.

“We see hotels sometimes in cycles like this being treated as an asset class. When people start thinking about that you don’t get the perspective of a true hotelier,” said Amar Lalvani, CEO and managing director of Standard International, which helped usher in the boutique hotel craze with its Standard Hotel in the then-industrial Meatpacking District. “The reality is that throughout history, the nature of real estate is to build too much when times are good, and then stop building when times are bad. It’s inevitable.”

There is also the question of how neighborhood development moves in lockstep with elements of tourism and hospitality. In New York City this phenomenon is complicated by the different identities and cultural landscapes native to each neighborhood.

As the city at large has become safer and more accessible to tourists, real estate development has had a homogenizing effect on neighborhoods once known for their diverse residents, architectures, and ways of living.

Neighborhoods like Harlem, with its iconic history and atmosphere, are changing to accommodate the patrons of hotels, high-end restaurants, and expansive retail shopping outposts. These projects, obviously, aren’t meant for its residents, but the increasing tide of visitors both international and domestic to the area.

The development and marketing of neighborhoods as discrete destinations has led New York City away from seasonality and toward becoming a year-round attraction for visitors.

NYC & Company has made a heavy push marketing New York City’s outer boroughs and less well-known neighborhoods to tourists in recent years. New neighborhood guides are available for dozens of neighborhoods on the group’s website, ranging from classic destinations to lesser known areas in Staten Island and Queens. The destination marketing organization has also dipped its toes into social media with its recent #seeyourcity campaign, which features videos for several emerging neighborhoods.

“[Marketing is] really a big opportunity for us to try to shift some of the demand for New York City tourism into these slower periods,” said Chris Heywood, Senior Vice President of Global Communications at NYC & Company. “That's why you'll see a tremendous focus on our organization and pushing toward them more into those slower months. We can spread the visitors out throughout the entire city, to all the neighborhoods, but then we can also redistribute, if you will, or try at least to redistribute the flow of tourism to more of those lower demand periods, and really highlight the value of a visit to New York in winter. It's something we'll do a lot more as tourism grows.”

The flashpoint of this kind of development in recent years has been Brooklyn’s Williamsburg neighborhood. Once a haven for artists and creatives looking for cheap rent and a dynamic social scene, its rise in popularity has led to a wave of real estate investment by luxury apartment developers, billion-dollar businesses like Vice, and now, increasingly, hoteliers.

The evolution of Williamsburg as a destination for wealthy New Yorkers and hip tourists has led to the entry of the types of chain businesses you tend to see in upscale city centers across the world and tourist-friendly New York neighborhoods like Soho, the Meatpacking District, and Midtown.

“Why would you go to Williamsburg to shop at the Apple Store and Starbucks?” asked Tim Donnelly, the editor of Brooklyn-based blog Brokelyn which has tracked the effect of gentrification and increased tourism for years. “You’re moving people into these neighborhoods via hotels, Airbnb, and high rent increases who are attracted to the neighborhood by the things that are being priced out of the neighborhood. It’s this weird attrition of street cred and appeal to anyone who’s not an awful person.”


There is plenty of economic and sociological research to back up the effects of economic change on city neighborhoods. It can be instructive to look at how the economic reality of how neighborhoods change and how elements of tourism growth and development tend to reinforce each other at a certain point in the cycle.

Gentrification is a term first popularized by Canadian writer Jane Jacobs in her seminal work on urban development, “The Death and Life of American Cities.” In her book, Jacobs focuses on the cycle of renewal that helps power the development of city neighborhoods, particularly the role played by wealthy, upscale families when they move into poorer neighborhoods to save on rental rates. These families end up displacing their less affluent neighbors as a result of rising rents and property values.

Developers and investors shift their focus to building expensive new apartment buildings or revamping older buildings to cash in on the increased demand from more wealthy households. A new, more expensive crop of stores, services, and restaurants then follow to serve these wealthier residents, further increasing the cost of living for existing locals.

These neighborhoods also, inevitably, become safer to live in and visit. There is a racial element to this change as well; gentrifying neighborhoods tend to attract disproportionately white, college-educated families.

While unremarked upon in Jacobs’ 1961 classic, the last half-century has borne out that neighborhoods undergoing this process inevitably become magnets for tourism and the development of businesses like hotels and restaurants catering to the international leisure class.

“As [neighborhoods] become more attractive to live in, meaning that they have restaurants and shops and a night scene and a music scene or whatever, then they also become more attractive to visit,” said Lamoureux. “Unfortunately, without proper regulation in place, that often equates to gentrification. Say you have places that are losing a lot of their grit because people are moving there and property values are going up, more tourists are coming in. Then you can get more for your rental. Unfortunately, you can't just point to tourism and say tourism is the culprit.”

An analysis of research on gentrification by NYU’s Furman Center for Real Estate and Urban policy helps bear out the correlation between falling crime rates, rising rental rates, and tourist visitation in New York City.

“We find that declines in city crime are associated with increases in the probability that high income and college-educated households choose to move into central city neighborhoods, including low-income and majority minority central city neighborhoods,” reads a recent Furman Center working paper titled, “Has Falling Crime Invited Gentrification?” “Moreover, we find little evidence that households with lower incomes and without college degrees are more likely to move to cities when violent crime falls. These results hold during the 1990s as well as the 2000s and for the 100 largest metropolitan areas, where crime declines were greatest. There is weaker evidence that white households are disproportionately drawn to cities as crime falls in the 100 largest metropolitan areas from 2000 to 2010.”

An examination of the Furman Center’s most recent report on gentrification hints at the connection between the development of New York City neighborhoods and rising rent prices. When considered in tandem with New York City tourism trends, some overlap is impossible to ignore.

The organization’s most recent major report on gentrification, State of New York City’s Housing and Neighborhoods in 2015, shows the neighborhoods that have seen the most intense rent increases from 2004 to 2014.

Excluding areas already known for attracting wealthy residents, these neighborhoods overlap with those known for experiencing the biggest increases in tourism and hotel development. Williamsburg, Central Harlem, and the Lower East Side have experienced the most gentrification by the metric of average rent increases.

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While there is limited available data on which New York City neighborhoods have received the most tourists, NYC & Company has been active in promoting the outer boroughs to both domestic and international visitors to combat overcrowding at the city’s most popular tourist attractions.

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“The share of households who were rent burdened (paying 30 percent or more of their pre-tax income on gross rent) rose significantly citywide — from 40.7 percent in 2000 to 51.7 percent in 2010–2014,” reads the report. “Burdens rose in all types of neighborhoods during this period, with the sharpest rises in non-gentrifying neighborhoods... By 2010–2014, 58.5 percent of households in the city’s non-gentrifying neighborhoods, 52.9 percent in the city’s gentrifying neighborhoods and 49.3 percent in higher-income neighborhoods were rent burdened.”

This ties in to the recent rise of Airbnb in New York City, as rent-burdened locals have turned to the homesharing service to help pay their rent.

There is an important consideration regarding the role of hospitality, restaurants, and other tourism-related industries for New York-area workers. Leisure and hospitality represented 12 percent of private sector employment in 2015, according to NYC Planning, outranked only by retail, professional and information services, and health and education.

The group pegs the total number of hospitality and food service workers in 2015 at 425,000, an increase of 88,000 workers from 2010 to 2015, larger than any other employment sector. While 56 percent of those jobs were gained in Manhattan, 23 percent were added in Brooklyn and 14 percent in Queens.

Average industry pay in 2014 was $53,045, above the citywide median of $45,540, according to a 2015 report from The NYC Labor Market Information Services at CUNY. New York’s hospitality workforce is also incredibly diverse, with 67 percent foreign-born and the highest-percentage living in Queens.

Hospitality is now a significant economic driver in New York City for both businesses and the working class.

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A History of Hotels

To understand the role that hotels have played in the development of New York City as a preeminent tourism destination, it is instructive to look at the factors that once limited the city’s viability as a destination.

New York always had a healthy stable of luxury hotels located in a zone stretching from Midtown to the neighborhoods abutting the lower half of Central Park. These hotels, like the Waldorf Astoria and Plaza Hotel, catered more to business travelers and the wealthy than average families looking to visit the city on vacation.

In this case, the Marriott family played a huge role in democratizing New York City hospitality, taking risks with the development of an enormous hotel at a time when hotel investment was anything but a sure bet. Bill Marriott Jr., son of Marriott Hotels founder Bill Marriott, first had the vision for building a big box hotel in Times Square, which at the time was known to be a den of vice replete with hustlers, pornographic movie theaters, and sex shops.

Following a rezoning of the area by Mayor Bill Lindsay in the 1970s, Bill Marriott Jr. pushed for something unprecedented in New York: an enormous multi-use hotel that would combine hotel rooms, theater space, meeting rooms, bars, and restaurants aimed to not only attract visitors to Times Square, but keep them there.

“[The real estate] just kind of sat there and nothing was being developed as there was an economic crisis and then Bill Marriott Jr., the current Bill Marriott who is now in his 80s, decided that he wanted to build a hotel,” said Kathy Duffy, New York market director of public relations for Marriott International. “His father, Marriott Senior, didn't want any part of it. It was a huge risk for Bill Marriott Sr. to say we're going to build a hotel in Times Square. It's not the PR person talking, but the challenges of the neighborhood at the time. People came here to visit or see a Broadway show and then they left. They did not linger. The Marquis was really the pioneer in being the first brand to place itself in the middle of Times Square.”

The John Portman-designed hotel would eventually debut in 1985, after years of delays. Several classic theaters were destroyed to make room for the hotel, which would end up comprising 48 floors with a towering atrium, the biggest hotel ballroom in New York at the time, and 130,000 square-feet of meeting space.

The Marriott family played a huge role in democratizing New York City hospitality, taking risks with the development of an enormous hotel at a time when hotel investment was anything but a sure bet.

The hotel was even designed to shield both guests and employees from that chaos that was Times Square at the time.

“The hotel main lobby, check-in and lobby was on the eighth floor, and it still is. At that time it was for a reason,” said Duffy. “You didn't want people at street level handling cash and checking people in because there was a lot of riff-raff in Times Square. The hotel guests arrived by a shared entrance with the driveway, so there's no actual front door on Broadway. At some point critics were saying of the architectural design that the hotel is turning its back on Broadway because there was not a main, welcoming front door. I think there was supposed to be some kind of a plaza in the architectural design and it’s ironic that in this day and age there are plazas all over Times Square. That's a huge change from way back when.”

The rest is history. The New York Marriott Marquis became a smash hit, perhaps the most popular hotel in the city. Its combination of meeting space along with several restaurants and bars made it an attractive option for business travelers, while its proximity to Broadway shows and relative remove from the street made it suitable for tourists and families.

“This general manager told me we put someone on the eighth floor with a clicker and they were supposed to click how many people they saw getting on and off the elevator,” said Duffy. “And the clicker broke.”

The big bet by Marriott Jr. had paid off, and would only seem smarter when Disney moved in to redevelop parts of Times Square in the 1990s, making the area a bona fide tourist attraction in its own right. Marriott executives still look to the example of the development of the Marriott Marquis when looking at potential properties in other major urban markets.

“The Marriott Marquis, in particular, we talk about surprisingly frequently when we’re looking at prospective places to put hotels that we think can be transformative to their markets, or perhaps there may be a vision lacking within our organization or elsewhere about what possible impact a hotel can have,” said Noah Silverman, chief development officer of North America Full Service Hotels for Marriott International. “When we were in discussions with the owner of JW Marriott at LA Live, there was discussion about the Marriott Marquis transforming its location and our company as a whole. This comes up in other deals in pioneering locations and we come back to the Marquis to look at the impact a hotel of that size can have on a market.”

Adaptive City

With the city rapidly cleaning up through redevelopment and the aggressive policing policy under Mayor Rudolph Giuliani, hotel development became a solid bet for investors and major chains. In 1990, according to The New York Times, the city attracted just 25.3 million tourists; in 2015, it had more than doubled to 60.3 million visitors.

Hotel development continued apace with tourism growth, and a significant factor in the continued viability of hospitality has been the ease at which developers can select a site and start building a new property. The 2015 Hotel Development in NYC: Room for Improvement report from the Pratt Center for Community Development lays bare the factors that have helped drive the hotel building boom in the city.

First, hotels offer a better return on investment to owners compared to any other type of real estate asset.

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Average revenue per square foot tends to be higher for hotels than residential, commercial, and industrial uses. They also yield much higher operating income per square foot and have a greater property value than other types of buildings in similar locations.

“Each of these financial measures highlights how hotels are not just more lucrative than other land uses but many times more profitable than even residential and commercial land uses in the same neighborhood,” states the report. “This disparity gives hotel developers an advantage over developers of housing and commercial space and exacerbates the challenges of increasing the inventory of affordable housing, affordable office space for the emerging hi-tech sector, as well as local neighborhood services and retail.”

Second, zoning laws make it simple to build new hotels. Developers don’t need special permission from community boards, urban planners, or city officials; they can simply build new properties “as-of-right” in most non-residentially zoned areas. In other words, it’s easy to put a hotel into lots that are formally zoned for commercial or industrial use.

Coupled with the decline of manufacturing and industry in the city as a whole, this phenomenon has led many landowners to partner with hospitality groups instead of other industries.

“We think there needs to be greater land use regulations in place because of the porous zoning in [manufacturing] zones,” said Paula Crespo, a senior planner at the Pratt Center for Community Development in Brooklyn. “When a hotel pops up in a [manufacturing] zone, it sends a signal to the local real estate market that non-industrial uses can make it there and it makes nearby landlords think to not renew the lease with the industrial firm in the building.”

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Source: Pratt Center

This has a compounding effect in many neighborhoods, particularly those in the outer boroughs. As hotels sprout up, retail and restaurants tend to follow. A look at a map prepared by the Pratt Center of hotels built before 2004 and hotels built from 2004 to 2014, along with hotel pipeline data from 2015, shows that neighborhoods that had never had a strong hotel presence before have become more tourist-friendly.

New hotel development overlaps with most of the areas that have experienced the most gentrification in the last decade, but the hotels themselves likely aren’t the cause of gentrification.

“Hotels also tend to be near other amenities that tourists like; but this isn’t the case in all neighborhoods,” said Crespo. “It seems to be the case in Williamsburg. You don’t only have hotels, you have restaurants and retail. Those uses are allowed as-of-right, so it’s not just about the hotels but the auxiliary uses that accompany them.”

Zoning has played a pivotal role in the growth of New York City tourism. Under Mayor Michael Bloomberg, who took office in 2002, an unprecedented number of neighborhood rezoning efforts took place. The neighborhoods that are now experiencing the most gentrification and hotel growth, like Harlem, Williamsburg, and the Lower East Side, were each rezoned with economic redevelopment in mind.

According to Curbed, 124 rezonings were approved during Bloomberg’s 12 years as mayor, affecting 40 percent of the city’s total area. Most of these were aimed at transforming barren areas zoned for industrial use, like the Williamsburg waterfront, into commercial or residential-zoned blocks.

The opportunity for hotel development became clear; a company could develop a hotel in an industrial or commercial zone, in areas which would likely also be embraced by wealthy new residents, restaurateurs, retail shops, and other types of businesses attractive to tourists. Manufacturing moving into these zones could lead to the construction of buildings less attractive to tourism like affordable housing, factories, or office buildings.

“A growing tourism industry is an important contributor to the City’s economic well-being, and new hotel development is vital to that industry,” reads the Pratt Center report. “However, developing affordable housing, preserving Class B office space for high-tech and related entrepreneurs, and preserving and expanding the city’s manufacturing sector and industrial infrastructure are also important policy goals that should not be secondary to the goal of expanding the hospitality sector.”

Brooklyn and Queens hotels, as well, are mostly as profitable as Manhattan hotels; according to that June 2016 Jones Lang LaSalle report, “In terms of key performance metrics, comparing institutional full service hotels located in the outer boroughs with those in Manhattan reveals that both groups achieved similar occupancy levels in the mid- to high-80 percent range over the past five years, suggesting similar demand levels. Over the same time period, the outer borough properties have operated with rate discount of approximately 25 percent. The rate discount, however, has declined from 2010 to 2015.”

For what it’s worth, current Mayor Bill de Blasio is taking steps to potentially limit the influx of new hotels going forward. In November 2014, de Blasio announced a plan to limit the ability of hotels to take advantage of “as-of-right” zoning, instead portioning off new industrial zones with the goal of creating a robust, specialized industrial resurgence in the city.

“As part of this commitment to strengthening core industrial areas, the City will enact new safeguards against the influx of tourist hotels and personal mini-storage facilities to preserve opportunities for industrial and manufacturing businesses,” reads a 2015 statement on the new policy from the Mayor’s office. “Specifically, the Administration will work with the City Council to create a new special permit that will be required for any hotel developments in [manufacturing] districts within [industrial business zones] (with the exception of a portion of the area around JFK, where hotels serve airport-related businesses).”

Zoning has played a pivotal role in the growth of New York City tourism. The neighborhoods that are now experiencing the most gentrification and hotel growth, like Harlem, Williamsburg, and the Lower East Side, were each rezoned with economic redevelopment in mind.

Surprisingly, not everyone in the hotel business is opposed to these common-sense regulations. Hotel labor, perhaps counterintuitively, is on the side of the de Blasio administration when it comes to limiting hotel growth in the city.

“The de Blasio administration’s plan to grow industrial and manufacturing jobs by promoting balanced, sustainable development is a perfect example of how the City can incentivize job growth through smart zoning,” said Peter Ward, president of the New York Hotel and Motel Trades Council, when the policy was announced. “We applaud the Mayor for recognizing that hotel development is unique, and a one-size-fits-all approach for hotel construction in New York City does not make sense. Through special permits in these zones, all community stakeholders will have a role in determining what kind of development defines our communities, and all New Yorkers will be better off because of it.”

This Industrial Action Plan, however, has yet to be implemented. A proposal of the new rules has yet to be released, according to The New York Times, after the New York Hotel and Motel Trades Council pushed for more restrictive rules constraining the building of hotels. In an election year, it may be unlikely that the law is implemented at all.

The city has also turned to excess hotel rooms as housing for the city’s rising homeless population. Roughly 2,500 hotel rooms were being used to house New York’s homeless in November 2016.

The new regulations from de Blasio’s office, once enacted, will likely help reduce hotel development in the future, since it will present a roadblock to many properties slated for industrial zones. For the time being, the city should still expect to see more than 15,000 hotel rooms come online in the next five years, according to Smith Travel Research (STR).

Leading a Hotel Revolution

Beginning in 1990s New York City, the emergence of tourism as an economic force had the pleasant side effect of making the city ripe for a new wave of evolution and experimentation for hoteliers. It also showed the power that tourism has to help reinvent neighborhoods and, consequently, make them more expensive for locals.

The scope of new hotel development since 2010 is staggering. Manhattan alone added 121 hotels from January 2010 to the end of 2016, according to STR, and is slated to have grown 32 percent over its 2010 levels once the remaining rooms in the pipeline are built. Brooklyn, similarly, added at least 42 hotels during that time, an increase of 200 percent from 2010.

Hotels, along with their food and beverage outlets, have become a magnet for not just tourists, but locals as well. The model of the hotel as entertainment concept has its roots in New York City, and has helped define the growth of hospitality over the last two decades.

“It’s almost like an entertainment concept as a hotel, the notion of the programming and adding something on to move from heads in beds to another level,” said Standard Hotels’ Lalvani, who helped grow the Standard Hotel in New York’s Meatpacking District into one of the most dynamic properties of the boutique hotel craze. “The other thing I would say is the customers have become a lot more discerning in general as this category has extended. In the old days, in the mid-90s to early 2000s, it was almost enough just to have a crowded bar downstairs. Even that was novel, to have the lobby buzzing. Now we’ve gone well beyond that; people are so sophisticated it’s about the quality of the food and who the chef is and where the people are from. It’s a tribute to what the hotels have done, these types of hotels where people care about design and experience.”

Not every hotel needs to offer dining and nightlife options. A full service hotel may not be a worthwhile investment for developers due to the increased cost of building and operating those properties, especially if travelers are going to spend the bulk of their time in destination exploring neighborhoods, eating at diverse local restaurants, and patronizing bars.

“During this last real estate cycle, the interest around urban select service hotels has driven a lot of our growth in Manhattan,” said Eric Jacobs, chief development officer of North American lodging for Marriott International, who handles full-service development for the company. “We probably had less than 10 select service hotels 10 or 15 years ago, today we’re approaching 40. Some of it has been the investment criteria of the owners and the people who want to own urban select service have been the interest of this last cycle. A lot of that has come from the re-gentrification of cities as a whole. We’re seeing re-gentrification in the last two real estate cycles, new condos and development being places to live in city centers. With that comes restaurants, shopping, and then comes the tourism piece. Prior to 2005 we had limited distribution in the sub cities, whether Brooklyn or Long Island City, where we’ve got a number of hotels in those markets in development or open today.”

Manhattan in particular reflects the diversification of new brands and hotel concepts across the industry, since extremely strong fundamentals make it an extremely strong location to test or launch the potential brands that can scale on the international level. The market also represents an opportunity for global brands to increase their visibility with business travelers and tastemakers.

"It’s almost like an entertainment concept as a hotel, the notion of the programming and adding something on to move from heads in beds to another level."

Amar Lalvani, CEO Standard Hotels

“The diversity of New York and its traveler and the types of travelers NYC brings, whether domestic or international, means there’s no better place to go launch a brand, or try to launch an independent hotel, because of the diversity of the travelers and the ability to create a hotel that fits within a neighborhood that’s very unique to NYC,” said Jacobs. “I’m not sure there’s another city, San Francisco maybe and Los Angeles a little bit, that you’re almost guaranteed to have the occupancy. Even with all the rooms, and Airbnb, the occupancy in NYC is still an all-time high. That’s why you see the diversity of brand launches.”

Bigger hotels operating under established mainstream brands also have an advantage in a market with extreme, unceasing demand: they can offer a higher level of service to their guests than a tiny hotel with only two employees in the lobby. An established brand for consumers also doesn’t really need to market as heavily in a competitive market.

“We employ over 1,300 team members, that's where it starts,” said Laurens Zieren, general manager of the Hilton New York Midtown, about the giant hotel’s focus on service. “If that guest comes into the hotel, we want to make sure that they don't feel lost in a 2,000-bedroom hotel. They require personal attention. I think that's the only way you can make a guest feel at home in a 2,000-bedroom hotel.”

The rise of hotels as an asset class has also led to financial speculation in recent years. Companies headquartered abroad, particularly in Asia, have been active in acquiring prestige New York City hotel assets, often for exorbitant prices.

The acquisition of the iconic Waldorf Astoria hotel by China’s Anbang Insurance Group for $1.95 billion, and its subsequent investment of about $1 billion in renovating the property, is one of the more high-profile example of foreign money’s influence in New York’s hotel market. Anbang also owns the JW Marriott Essex House Hotel following its $6.5 billion acquisition of Strategic Hotels and Resorts.

“There are countries or people at different points in time that invest in real estate for different reasons,” explained Lalvani. “If you look at New York, there are multiple types of people who invest. U.S. private equity groups who need to make a high rate of return, you see them being less active right now because things got a little soft. They’re sitting on the sideline because the cost of capital is so high and [real estate investment trusts] are sitting too.

“International capital has more to do with their own challenges than it necessarily has to do with the fundamentals here. They may have various reasons why capital is sitting somewhere else, it may be their view on what is going to happen with their currency or government or a diversification they need with assets. It’s often due to what’s happening with them, big deals like Waldorf and a lot of others.”

As hotel asset prices have risen, along with the surge in hotel rooms available, the industry’s fundamentals have remained resilient. Typically, a market with so much added room supply would experience decreased room rates and occupancy.

As of November 2016, year-to-date occupancy in the New York City hotel market was 85.7 percent, according to STR. This is extremely high; in the hotel business, successful hotels generally operate with between 60 and 70 percent occupancy. Demand has increased along with occupancy, meaning that the increased supply of hotel rooms hasn’t undermined the pricing power of individual hotels.

Occupancy never slipped heavily even as the city pulled out of the Great Recession, with 2010’s yearly occupancy at 82.3 percent. But there is a slight softening in revenue per available room, the metric used by hoteliers to measure how much money they’re earning with each hotel room. This metric has been on the downslide since 2014, which saw a yearly average of $232.28, to $218.79 for 2016 as of the end of November.

Experts say this softness in rate isn’t cause for alarm, since occupancy is still climbing. But some suggest developers may delay some upcoming hotel projects.

“There is a lot proposed,” said Marriott’s Jacobs. “People have bought sites, bought buildings, are in the planning process. There is a little bit of a pause going on right now in the last six months, more folks are [saying they’re going to build a hotel but] there’s a little bit of a slowdown [in getting started].”

Airbnb and Neighborhoods

Any conversation about how tourism works to change neighborhoods would be incomplete without exploring the impact of homesharing services, particularly Airbnb.

The growth of Airbnb in New York City has been fast and pervasive, with tens of thousands of listings popping up on the site within a matter of years. A look at the latest data from Inside Airbnb, which tracks Airbnb listings in dozens of global markets, shows that 40,227 listings are currently active in New York City, 49.5 percent of which are full home or apartment rentals.

A June 2016 review from The New York State Comptroller’s Office estimated that New York City had more than 107,000 hotel rooms in 2015 with another 26,500 rooms slated to come online by 2020. It also states that lodging taxes raised $1.8 billion for the city’s government in 2015, double the amount raised in 2009.

Taken together, these numbers show that Airbnb has likely increased New York City’s inventory of available rooms for travelers by about 35 percent. Of course, the type of guest that stays at a hotel can be very different than one that uses Airbnb; the strength of New York’s hotel industry when considered alongside the massive increase in Airbnb shows just how high the demand for lodging is in New York City.

More than one-quarter of these Airbnb listings are listed by hosts offering multiple listings, which has led to New York State government stepping in, in an attempt to regulate the abuse of Airbnb to essentially run illegal hotels.

For the hotel industry itself, Airbnb seems to have had a marginal effect.

“Should you argue the number of rooms should have grown faster? Yes, but the verdict is still out,” said Jan Freitag, senior vice president of lodging insights for STR. “Is there an impact? Yes. But is it measurable? No. Airbnb is almost circumventing the law by putting in a 300-room hotel, but it’s just across multiple buildings. Would those people have just stayed in a hotel? It’s a multi-faceted question.”

There’s been a pointed backlash in New York City and State about the service’s impact on both communities and real estate. Airbnb recently dropped its lawsuit challenging new regulations put in place by New York City that penalizes hosts who are found to advertise rentals for less than 30 days at a time. It also cut a deal to pay taxes on rented rooms similar to those paid out by the hotel industry.

“People here are very skeptical and dubious of these West Coast-based tech companies that come here and try to change things,” said Tim Donnelly of Brokelyn, which has been covering the rise of Airbnb in New York City neighborhoods for years. “That’s why there was a big fight with Uber, and now there’s an Airbnb thing. It comes from this tech culture of commodifying everything, and Airbnb seemed to be a little tone deaf in their approach to things.”

Airbnb took flak from New Yorkers following a series of controversial ads that portrayed the homesharing service as a solution for struggling families beset by rising rent costs.

They also released a series of vaguely racist online tourism guides for users of the service.

A written piece on Airbnb’s pro-Airbnb site airbnbcitizen lays out the financial calculus for struggling New Yorkers who turn to Airbnb in desperation .

“Faced with unemployment, a mortgage payment and a second baby on the way, Linda turned to Airbnb to make ends meet,” reads a piece on the site. “By sharing her home with guests from around the world, Linda is able to pay the bills and spend quality time with her kids.”

It also details the argument used by Airbnb itself to try to seize a populist mantle to justify its presence across New York City, which has been rejected by the government through its recent legislation:

‘The best part about Airbnb? It gives me the financial freedom to be a mom.’ That freedom is in jeopardy right now, thanks to a broadly written bill that was recently passed by the New York legislature. If this bill becomes law, politicians in Albany would be robbing middle class New Yorkers of the very economic lifeline that keeps them afloat. But that’s not all. The harmful and overreaching legislation threatens to fine hosts like Linda up to $7,500 just for listing their home on Airbnb. ‘I 100% rely on Airbnb to make ends meet. I honestly don’t know what I would do if I couldn’t share my home anymore.’

The reality is that gentrification, and the rising rent costs and cost of living in neighborhoods most affected by it, caused people to turn to Airbnb as an additional source of income since Airbnb began widespread growth in 2011. The money generated for struggling families by renting out space in their apartment is only possible because of the intense demand for lodging in the city, and underscores the city’s lack of progress in ensuring housing remains affordable for its citizens. In a way, through Airbnb, tourism is actually providing a service abdicated by the government, helping New Yorkers who are unemployed or struggling to meet rent and continue to live in their apartments.

“You shouldn’t have to become an amatuer hotelier to live in the neighborhood your family lived in for a generation,” said Donnelly of the Bed-Stuy ad. “Not every neighborhood was a tourist neighborhood for decades, because you didn’t have hotels in [neighborhoods like] Williamsburg. Let’s say you have Williamsburg in the mid-2000s and hotels start opening. Suddenly it becomes more tourist-friendly, then Airbnb comes along and people start renting rooms. It creates more of a tourist turnover, and now you have businesses devoted to bilking French tourists who are there who want to see the ‘real Brooklyn.’”

The data bear out Donnelly’s point with respect to Williamsburg in particular. Williamsburg and Greenpoint were at “virtually no hotel capacity prior to 2005,” according to NYC & Company and STR. Now there are at least eight properties open or under construction. An examination of Inside Airbnb’s most recent data shows that there are at least 3,700 Airbnb listings active in Williamsburg. Combined with new hotels, this represents a disruptive shift in the fabric of the neighborhood.

Other gentrifying neighborhoods without a robust hospitality presence have seen a surge in Airbnb listings and tourism as well. Harlem has about 2,450 listings, for instance, and more than 1,900 in Bushwick.

“It’s kind of ironic that the people who are looking for that most authentic cultural experience are the ones making it harder for that culture to stay alive because the neighborhoods become less neighborhood-y,” said Rachel Eve Stein, a member of BewareBNB, a neighborhood group based in Gowanus that is opposed to gentrification and displacement. “The salt-of-the-earth folks aren’t able to live there anymore, because everybody wants the convenience, they want a certain thing they can’t necessarily have. Amongst certain classes of society there is this idea of entitlement when talking about gentrification. It’s related in that way: the idea that I want this thing and I don’t care what the effect is [of getting it].”

The influence of Airbnb’s 40,000-plus listings in New York City is hard to qualify, but when considered in conjunction with the rising prices of gentrification and the shift away from accessible middle-class jobs, it makes sense that the peripheral effect of alternative lodgings helping New Yorkers pay their rent involves more outsiders visiting diverse neighborhoods without staying at a hotel.

A 2015 report from The Real Deal, which was disputed by Airbnb itself, found that Airbnb listings effectively drive up rent prices due to the actions of Airbnb superhosts who are gobbling up apartments to list on Airbnb that would otherwise be rented more affordably to locals.

There has been some good news as late with respect to rental rates in New York City, however, as recent evidence shows that a widespread decline in rent price may be taking place. A November 2016 report from brokerage Douglas Elliman shows that rental prices are edging downward in Manhattan, Brooklyn, and northwest Queens.

This is likely a result of the same building boom that helped power hotel development in the last six years. It could also just be a slight correction in a market that has been overheating in recent years. It’ll be interesting to see if Airbnb hosts start to move away from the service if they no longer need the hassle of hosting guests to afford their rent and paying fines to the government for potential violations.

“There’s a false idea everyone opposed to Airbnb is from the hotel industry,” said Stein. “We obviously need more affordable options for people traveling, but this is not the solution. People have been fighting for centuries to have good clean affordable housing and there’s a reason why we have these regulations in cities. If one person does something, other people are going to do it. I wish people would consider that before using a certain platform.”

A report prepared by the New York Attorney General’s office on the Airbnb phenomenon in New York City from 2010 to 2014 underscores the role Airbnb has played in accelerated gentrification.

The rentals located in gentrified or gentrifying neighborhoods earned the most money for hosts by a wide margin. More than a dozen buildings in those neighborhoods had 60 percent or more apartments rented out on Airbnb, acting essentially as unregulated hotels.

“Bookings in just three Community Districts in Manhattan — the Lower East Side/Chinatown, Chelsea/Hell’s Kitchen, and Greenwich Village/SoHo — accounted for approximately $187 million in revenue to hosts, or more than 40 percent of private stay revenue to hosts during the Review Period,” according to the report. “By contrast, all the reservations in three boroughs (Queens, Staten Island, and the Bronx) brought hosts revenue of $12 million — less than three percent of the New York City total.”

Click chart to enlarge

It found that short-term rentals had made more than 2,000 apartments “largely unavailable for use by long-term residents” as a result. In Brooklyn, Williamsburg and Greenpoint accounted for 40 percent of Airbnb host revenue, the highest of any neighborhood by a wide margin.

Activities Go High-Tech

As technology has become more sophisticated, and the behavior of travelers has shifted to accommodate these tools, activities providers face the challenge of better meeting the needs of their potential customers. While traditional tours are still extremely popular, particularly bus tours and tours of landmarks like the Empire State Building, traveler trends show that a new breed of visitor wants more control over their journey once in destination.

What exactly do today’s modern, technology-equipped tourists want out of their New York experience?

“I think today's audiences have to be entertained before they can be educated,” said Nick Gray, founder of Museum Hack, which offers bespoke museum tours. “In the past, people would do these monumental tours for a museum, which was the tour guide spitting out facts. Those facts in an age of Wikipedia and online stuff, the last 15 years have completely changed the reason why people would need a facilitator. No longer just having the facts is impressive, I can just pull those facts up on my phone. We see it more as like being a Sherpa through the museum’s space. It's someone like a coach. They're helping manage your energy levels. They're telling you funny stories. They're keeping you engaged. For me that's where the magic sauce comes in.”

Museum Hack has grown across the U.S., bearing out the global interest in tours that do more than just take visitors to notable locations. In some cases, the active pace of the tours or risqué content preclude groups like children or the elderly from participating. In New York, Museum Hack has expanded from its roots at the Met to offering a speakeasy walking tour as well, showing the demand for niche experiences. While traditional tours are still extremely popular, more travelers want to book online and have an interactive experience while on their tour.

If you ask Sree Sreenivasan, former chief digital officer for the Metropolitan Museum of Art and New York City’s current chief digital officer, what resonates with the modern traveler, he thinks brands that reach travelers with strong digital and mobile offerings are well positioned for the future.

“At the Met, we looked at the challenge to make a virtuous circle,” said Sreenivasan. “Make the online experience so fantastic that people want to come in person, and then make the in-person experience so fantastic that people want to stay in touch and get the newsletter, follow you on social and all of that. That was the goal. I believe that all tourist destinations need to do that, because the future of all businesses, the connection between the physical and the digital, the in-person and the online. That's absolutely key for a single physical destination as well as great cities like New York. That's something that we really spent a lot of energy on and that was part of the challenge of the opportunity.”

He worked to modernize the museum’s digital presence by expanding into mobile video and across several social media channels. He also helped develop a mobile app for the Met and revamped the museum’s website to be more accessible to diverse visitors.

The same lessons that Sreenivasan learned at The Met are applicable to his role in Mayor de Blasio’s office, particularly in making New York City, a sprawling and diverse vacation destination, more accessible to tourists. Part of this is being responsive on social media to visitors with questions.

“The only way to get more people to know what you're doing is through digital, through online videos and other ways in which you kind of humanize this very imposing place,” said Sreenivasan. “I think there are parallels to that in what we are looking at for the city as well. Part of what we're looking at is how do we have the city become more human and have it be more accessible and how do we communicate as a city. We have like 80 city agencies doing social media, how do we make sure that they're communicating in a way that's more accessible and less like the government communicating? Those are some of the parallels we see in what we're doing.”

Some companies are looking to take tour distribution completely digital, eschewing tour guides for mobile phones instead.

"Make the online experience so fantastic that people want to come in person, and then make the in-person experience so fantastic that people want to stay in touch and get the newsletter, follow you on social and all of that. That was the goal."

Sree Sreenivasan, Chief Digital Officer, New York City

Detour offers GPS-guided tours on mobile, often led by history buffs or neighborhood experts, that cost only a few dollars to experience. Detour’s Brooklyn Bridge Tour, narrated by Ken Burns, is an example of Detour’s vision for making tours more accessible to those who don’t want to commit to a traditional walking tour.

“Maybe a good way to put it is we see what we're doing as taking what companies like Airbnb started in homes, this authentic experience where you feel like a local and you're made to feel like you belong, giving people an experience where they can walk around with someone who's not just a tour guide, but somebody who is telling you a story in a way that only they are in a position to tell it,” said Andrew Mason, founder of Detour and former CEO of Groupon. “They're part of the history somehow. They have a perspective that would otherwise be inaccessible.”

Detour recently partnered with Airbnb to bring its mobile tours to Airbnb Trips users, showing the overlap between the types of users Airbnb brings to cities and travelers who wouldn’t normally go on a traditional tour.

“The other big part of it is letting people do these on their own terms,” said Mason. “That means deciding who you're going to do it with and when you're going to do it, often without any planning. I think all of those elements speak to general trends that we're seeing, trends towards wanting a more authentic experience first of all or something that's authentic and an experience, something that's interactive where you're actually doing something. The next thing is not wanting to be with a group of tourists and wanting to be with your friends or the people that you are traveling with, not just a random group of people from Nebraska. Then doing it when you want is really speaking to the trend of millennials waiting longer and longer to plan.”

Promoting the variety of experiences available in New York City’s outer boroughs has been a crucial piece of the city from a marketing perspective. But the surfeit of different images of New York that people have, whether garnered from the media or past trips, can stand in the way of communicating the value of all that has changed about the city.

“It is a challenge,” said NYC & Company’s Heywood. “We've been using a nomenclature ‘the new New York’ in recent months as we talk to audiences and talk about New York, really to remind them, because many of them do have a hundred percent brand awareness. They see New York on TV. They can see New York on film. They see the morning shows. Now there's going to be even more attention on the city with the new president having a residence here, so just overall there's more scrutiny of New York. I think the challenge for us, really, is educating the visitors, educating the trades about the continuous change of the destination and all other things that there are on hand.”

Hotelier Perspective

What do hoteliers think about the changing demands of travelers and the effects of gentrification in their hotel’s neighborhood?

The story of hospitality in Brooklyn isn’t a long one, but the emergence of hotels in Williamsburg is one of the key trends of the last decade. The neighborhood went from zero hotels to at least eight over the course of the last decade, according to NYC & Company.

“Williamsburg is in great demand, any way you measure demand,” said Peter Lawrence, general manager of The Wythe Hotel in Williamsburg. “Even for someone who spends every day in the neighborhood, it can be tough to keep up with the speed and scale of the change. It’s also changing the fabric of the neighborhood; the reason we were open five years ago, while still important and valid, has shifted dramatically. Williamsburg is almost a completely different place now. New York City is obviously going to continue to flourish as an epicenter for all different travelers, and while Brooklyn is never going to [surpass Manhattan as a destination], it continues to become a more complex destination; it used to be adventurous tourists and for people who live here to explore.”

When The Wythe Hotel opened as a small boutique hotel five years ago, the shift of Williamsburg from a grungy formerly industrial neighborhood to a posh hipster destination had just begun. It rapidly became a hot locale for locals, thanks to its rooftop bar The Ides and upscale restaurant Reynard.

Since then, the hotel has seen its clientele switch over from international visitors to domestic as currency values have made it more expensive to visit New York. It has also developed a regular stable of repeat business travelers who relish staying in Brooklyn.

“I think there’s people who think of New York City as a separate entity from the U.S., because it’s very different here than the rest of the country,” said Lawrence. “Part of the reason we see fewer international travelers is because after five years we have a lot of regular guests. We’re small, we have 70 rooms. We’re trying to prioritize those return guests.”

The Wythe Hotel is facing increased competition in Williamsburg, particularly from The William Vale, a new 183-room luxury hotel on the southern border of McCarren Park.

“We thought this was the right time to open that type of hotel,” said William Vale general manager Sébastien Maingourd. “Doing this hotel five years ago would have been a bit early. As we like to say: the new Brooklyn is now. The owner really felt the neighborhood was ready for a new type of experience.”

According to Maingourd, the type of traveler staying at The William Vale is looking for the hotel’s amenities to complement their experience in Williamsburg, since the destination is truly the attraction.

“They’re more tech savvy, there is way more expectation in that sense,” said Maingourd. “They don’t like a traditional service style, but they love the amenities and the great food and beverage. What I see is that people are really using the hotel and spending time in the hotel; it’s not just that they're using the rooms, they’re using the hotel. They want a dynamic property, so we need to know what is going on in the neighborhood.”

Both these hotels have been designed and executed in line with Standard Hotels’ Lalvani’s vision of hospitality as a form of entertainment concept, the creation of a social space that brings in diverse and interesting people. But how do you square a hotel’s relationship with its neighbors in a time of unprecedented change and gentrification?

“Williamsburg was traditionally industry and manufacturing, not a five-story residential neighborhood,” said Lawrence. “I don’t know if it’s a move to having neighborhoods that only play one role, maybe it’s to neighborhoods that play more than one role.” Lawrence thinks that while the rapid rise of luxury residential and retail in Williamsburg has happened at a swift pace, there are still places that retain the artistic identity of Williamsburg circa the early 2000s, like non-profit performance venue National Sawdust.

The William Vale faced resistance from locals when it was first announced, due to its futuristic design and height that would block views of Manhattan for its neighbors. But according to Maingourd, the hotel has settled into the neighborhood well since its opening.

How do you square a hotel’s relationship with its neighbors in a time of unprecedented change and gentrification?

“At first when people heard about the project and saw the renderings, the 3D drawings of what the hotel was going to be, they thought it was a bit intimidating in size; we heard some concerns,” said Maingourd. “But to be honest, once we opened the hotel people realized how interactive it is because of the plaza and park we make public. People don’t need a room in the hotel to access them, it’s just the way the hotel layout has been done. Maybe they were scared it would be mass-market, but once we opened they realized we’re a cool lifestyle boutique hotel where you come across all kinds of people.”


The future for New York City as a tourist destination is almost certain. So long as the global economy is growing, and the U.S. dollar does not surge in value to record levels, tourists and workers from around the world will continue to visit.

There are a few obstacles to the continued growth of tourism. New York’s local airports are among the worst in the world, with LaGuardia being voted the world’s most terrible airport on a regular basis, and its public transportation system is deeply in debt, overcrowded, and in dire need of repair. These factors contribute a bit of grit to a city that has largely cleaned up its image and environment.

From the perspective of NYC & Company, exposing more neighborhoods to tourists is good for the economic development of the city.

“We're very bullish, we're very excited,” said Heywood. “We do want to make sure that we are continuing to be responsible with the tourism growth and that we try to do what we can to spread it out to all these new neighborhoods that are developing, and be in lockstep with the economic development that's going on, making sure that as these new areas come online that we can bring visitors there. I think that the biggest opportunity for us is to spread them out into those areas, but to be sensitive to the tourism growth, because we know that as tourism grows there may be challenges that come with it. How do we do that in a responsible way?”

Even if the economy hits a skid in the next couple years, the hospitality industry will likely continue to grow in scale; it bounced back the most quickly of any major U.S. city following the 2008 economic meltdown, and remains integral to international finance and technology industries.

But there is an extra wrinkle in the case of New York City’s hotel market. The building boom that has been happening so far this decade is expected to continue through 2020. In the case of reduced demand for travel to New York, for whatever reason, hotel fundamentals will likely be impacted.

“We are not projecting a recession, we are projecting that with prolonged slow growth in GDP there is going to be a continued increase in the number of rooms sold, but the room supply is going to be growing much more strongly,” said STR’s Freitag. “Occupancy is going to decline when that happens, and normally room rates soften. There’s a high likelihood room rates are going to decline much more. The good thing is that the industry is very cyclical, as GDP moves as does room demand. As GDP declines the first thing is travel and training, and if you look at the last couple cycles they rebounded quickly.”

If the de Blasio administration is finally able to place restrictions on where hotels can be built, the impact of such a downturn could be lessened.

One of the consistent threats to the vibrancy of New York City is simply the cost of living there, especially as more neighborhoods gentrify, modernize, and become less diverse as moneyed interests move in. Will neighborhoods lose their unique qualities and characters as economic development stretches further out into the Five Boroughs?

“What are the next neighborhoods [to change]?” asked Standard Hotels’ Lalvani. “Sadly, in reality artists and creative people just get priced out of neighborhoods. Look at what Soho was and is. Look at the growing food scene in Queens. A constant evolution keeps the city vibrant.”

Perhaps the reasons that people visit the city will change as the city itself evolves further into the 21st century. As more neighborhoods become more expensive to live in, the type of person who moves in and visits will change as well.

Thinking back to the impact of the Marriott Marquis New York on Times Square and Midtown Manhattan, as hotels become more integrated into neighborhoods across the city, will the aesthetics and offerings of neighborhoods come to reflect the hotels located in them? As digital tools allow a more diverse set of tours and activities in these neighborhoods, what happens to the local flavor of an area once it’s deluged with tourists?

As more neighborhoods become more expensive to live in, the type of person who moves in and visits will change as well.

Speaking with more than a dozen people for this report, no one mentioned what to this reporter seemed like the clear fallacy related to the recent gentrification of New York: that idea that economic expansion can continue forever in an urban environment.

Given the explosive rate of new construction in the city, it can be easy to forget that the old, beautiful apartment buildings and churches you see in currently-gentrifying neighborhoods like Bedford-Stuyvesant or Harlem were once populated by the wealthy before becoming more undesirable to live in.

If, for whatever reason, a protracted economic downturn occurs and travelers stop visiting New York in such large numbers, what’s going to happen to the neighborhoods that received hotels, fancy retail shops, and expensive restaurants instead of affordable housing or sustainable manufacturing jobs?

After having a front row seat for the recent gentrification of Williamsburg, The Wythe Hotel’s Peter Lawrence wonders what will happen as the city’s population becomes not only older and richer, but motivated by different factors in how they live.

“It’s a real challenge for the whole city: how do you remain open to younger people who are moving here and want to be involved in a creative lifestyle, in New York as it becomes prohibitively expensive to live here?”

This is a question that has yet to be answered.

About This Story

Photo Credits
From top to bottom
Times Square, Photo by Heather Schwartz/Skift
Brooklyn Bridge, Photo by Heather Schwartz/Skift
Empire State Building, Photo by Heather Schwartz/Skift
The Standard High Line, Photo by Jason Clampet/Skift
New York Subway, Photo by Heather Schwartz/Skift
New York Marriott Marquis, Photo courtesy Marriott International
Williamsburg Brooklyn, Photo by Heather Schwartz/Skift
Three adjacent select service hotels in midtown Manhattan, Mark Lennihan/Associated Press
Waldorf Astoria Hotel, Photo by Heather Schwartz/Skift
Airbnb protest in New York, Photo by Bebeto
Defaced Airbnb advertising in subway system, Poster Boy/Flickr
A selfie during a tour of the Metropolitan Museum of Art, Photo courtesy Museum Hack
T-shirts on sale, Photo by Dov Harrington/Flickr
William Vale Hotel, Photo courtesy William Vale Hotel
The Wythe Hotel, Photo courtesy The Wythe Hotel
World Trade Center Transportation Hub, Photo by Heather Schwartz/Skift

Ping Chan
Rachel Bronstein and Mike Linden
Jason Clampet and Sarah Enelow