Surge in travel leads to new hotel construction in North Jersey

An improving economy and a surge in business and leisure travel have led to plans for new hotels in Teaneck, Rutherford, Wayne, Paramus, Secaucus and other North Jersey towns.

Hotel construction dropped in the state and nation after the 2007-09 recession curtailed travel. But hotel occupancy rates — as well as nightly room prices — have rebounded to their highest levels in decades, and hospitality companies are responding with new inns.

"It reflects the fact that the economy is improving," said Bobby Bowers, senior vice president for operations at STR Inc., a research company that tracks the hospitality industry. Midprice brands with limited food and beverage offerings, like Courtyard by Marriott, Hilton Garden Inn, Hampton Inn and Holiday Inn Express, are leading the way, he said.

Planned or under construction

1. Teaneck: Combined Homewood Suites/Hampton Inn at Glenpointe mixed-use complex; 350 rooms; planned

2. Wayne: Hilton Garden Inn, Valley Road; almost done

3. Rutherford: 220-room hotel planned at the intersection of Routes 3 and 17; no brand selected yet

4. Paramus: 101-room Hampton Inn on From Road recently approved by zoning board

5. Paterson: Hilton planned near St. Joseph’s Regional Medical Center

6. Secaucus: a new Aloft hotel, a Starwood brand, planned at Harmon Meadow

7. North Bergen: Fairfield Inn under construction

8. Weehawken: Residence Inn/Renaissance Inn by Marriott planned

9. Union City: Wyndham hotel recently approved by city zoning officials

10. Montclair: The MC, a 148-room hotel that will be part of Marriott’s Autograph Collection of independent hotels.

In New Jersey, 14 hotel projects totaling 1,924 rooms are under construction, compared with nine at this time last year, according to STR. Another 44 hotels are in the planning stages in the state, STR said.

According to STR, there are 64 hotels in Bergen County, 41 in Hudson and 10 in Passaic, with average occupancies in all three counties above 72 percent. That's even higher than the national level of around 65 percent — the highest level in decades and up from a recent low of about 55 percent during the recession. Hotel room rates and revenues are also at peak levels, according to STR.

The growth in demand and revenues has made banks more willing to finance hotel projects.

Local hospitality

County	Hotels	Rooms	Rates*
Bergen	64	8,345	$121.91
Hudson	41	5,838	$158.12
Passaic	10	1,124	$92.61

 *Average daily rate

Occupancy rates

Hotel occupancy rates, which dipped during the last recession, have rebounded.

	Bergen	Passaic	Hudson
2005	70.6%	69.3%	72.9%
2006	70.1%	67.2%	72.9%
2007	71.1%	70%	74.1%
2008	66.4%	71.7%	72.5%
2009	57.5%	66.2%	65.4%
2010	65.7%	72.5%	72.5%
2011	68.2%	75.9%	74.1%
2012	68.5%	73.8%	75.2%
2013	69.9%	71.8%	74.9%
2014	72.1%	71.1%	75.6%

Source: STR Inc.

"Five years ago, lenders were very cautious about hotels, especially new construction and development," said Steven Angel, principal at Fulcrum Hospitality Management in Jersey City. "That environment is certainly improving. You're seeing much more of these types of developments. With interest rates low and demand for hotel rooms at all-time highs, it's the right market for additional development."

Hotel proposals also have an easier time gaining local approvals than other types of development. Municipal officials tend to like hotels because they offer a reliable stream of tax income, said Mark VanStekelenburg, managing director for PKF Consulting USA, a CBRE Group company. At the same time, hotels don't add to the burden on schools and other town services.

Strong metro market

The New York metropolitan area is an especially strong market for new construction, analysts say.

"There are certain cities that are hot, and none is hotter than New York City," said Hank Jones of the lodging industry consulting firm Kallenberger Jones & Co. agreed.

And that's spilling over to the suburbs, said VanStekelenburg.

"It's a value play," he said. "Someone can pay $50 or $100 less to stay at a hotel near transportation that gets them into the city."

He said Airbnb and other websites that allow individual property owners to rent out space haven't had a major impact on the demand for hotel rooms in the New York area, though they have constrained hotels' ability to charge very high rates during major sports events.

Alfred Sanzari Enterprises of Hackensack, owner of the Glenpointe mixed-use development in Teaneck that already includes a 350-room Marriott, announced this month that it will build a 350-room hotel combining two Hilton brands: Homewood Suites, which targets extended-stay travelers, and Hampton Inn. The two brands will share an entrance, meeting rooms, fitness center and parking garage. The idea behind a dual-branded hotel, Jones said, is that the hotel can save money by sharing staff and also attract two kinds of travelers — short stay and extended stay.

Angel of Fulcrum Hospitality Management, Sanzari's asset manager for the Glenpointe hotels, said that there's enough demand to support the new Teaneck hotel, which he expects to appeal mostly to corporate travelers.

Having both the Marriott and the two Hilton brands "gives us the benefit of both very well regarded hotel companies," he said. The new dual-branded hotel is expected to open in spring 2017.

In Rutherford, Lincoln Equities hopes to start construction next year on a 220-room hotel at the Highland Cross mixed-use redevelopment project at the intersection of Routes 3 and 17. Joel Bergstein, president of the East Rutherford-based Lincoln Equities, said a resurgence of economic activity in the Meadowlands — including the long-delayed American Dream retail and entertainment complex — should increase demand for hotel rooms.

"I look out my window and see American Dream moving forward on its water park," Bergstein said. "And we continue to see demand being generated by tourists staying in the Meadowlands instead of New York City." He said no hotel brand has been selected yet for the site.

The Highland Cross redevelopment, which is on an old industrial site, also is zoned for a second hotel, but Bergstein said the company is waiting to see how much demand there is before moving forward on that.

In Wayne, a Hilton Garden Inn is almost complete on Valley Road, near William Paterson University and Haier America, the U.S. headquarters of the Chinese appliance maker. Mayor Christopher Vergano called the new hotel a win-win for the township, in part because it adds to tax revenues while not requiring a lot of public services.

"It assists our local businesses, who have more places for visiting guests to stay," Vergano said. "We have Toys "R" Us, we have Haier, we have corporate headquarters that have a need for hotel rooms."

Paterson has an unusual hotel project planned — a 14-story Hilton to be built by the non-profit Medical Missions for Children near St. Joseph's Regional Medical Center on Main Street. The New Jersey Economic Development Authority approved $105.5 million in tax credits for the hotel. Frank Brady, chairman of the Medical Missions organization, declined to give a timeline for construction.

In Paramus, the zoning board recently approved a proposal for a 101-room Hampton Inn on From Road, geared toward business travelers. The hotel will replace a 1960s office building and will include an indoor swimming pool, gym and meeting room, but no bar or restaurant.

Montclair's downtown is also getting a new hotel, a joint venture of the Pinnacle Cos. of Montclair and the Morristown-based Hampshire Cos. The 148-room hotel will be called the MC, and will be part of Marriott's Autograph line of independent hotels.

In Secaucus, a new Aloft hotel is scheduled to open in April 2016 in the Harmon Meadow mixed-use development, according to Starwood Hotels and Resorts, the parent company of the Aloft brand. Harmon Meadow already has eight hotels.

Several other hotels are planned or under construction in Hudson County, including a Wyndham in Union City; a Fairfield Inn in North Bergen, which is expected to open early in 2016; and two Marriott hotels, a Residence Inn and a Renaissance, expected to open in 2017 at the Port Imperial redevelopment in Weehawken. The two Weehawken hotels will be side by side and will share a pool, fitness center and some other spaces.

Saddle Brook auction

In addition to the new hotels in the construction pipeline, an existing hotel has received a lot of attention recently. A 12-story cylindrical hotel, bearing a Crowne Plaza sign and visible from Route 80 in Saddle Brook, is set to be auctioned in late July. The hotel, a former Holiday Inn, was built in 1971 and closed in 2010. A Florida-based investor bought the leasehold in 2013 and spent millions to renovate the property. But he ran into legal trouble in another of his companies and agreed to sell this hotel and four others in other states to settle a lawsuit.

Source: NorthJersey.com