Demand high for Harlem Hotels, but no one’s taking advantage

Fall is peak season in New York’s hotel industry, when tourists and traveling business pros fill vacant rooms from Battery Park to Central Park.

In Harlem, hotel marketer Aquaria Harley, director of sales at Aloft – the neighborhood’s only conventional hotel – is charging up to $400 a night for one-to-two occupant rooms that are in high demand. Three years ago, she couldn’t have charged half that rate and stayed in business, but market forces have changed uptown as the city’s real estate market continues to expand. Today her occupancy rate borders 90 percent.

“When [customers] have to be in Harlem, there’s nowhere else to go because other hotels [throughout Manhattan] are sold out,” she explains.

Despite Aloft’s improved business, parent company Starwood Hotels has only recently turned a profit on the investment they made back in 2010 when they bought the 124-room Harlem property on Frederick Douglass Boulevard near 124^th Street for an undisclosed amount.

That’s because Aloft faces the same challenges as all conventional hotels with the added disadvantages of operating without the traditional amenities.

“We have no meeting space here,” Harley adds about the location. “Somebody from Columbia University calls and says, ‘I need a meeting room.’ Guess what? I have to recommend other meeting venues, and there’s not many.”

Aloft is the only traditional hotel in the entire neighborhood – from 110^th to 155^th streets. There are several reasons why.

First there’s the cost of construction. Most of Harlem’s commercial and residential real estate business comes from revitalizing properties that are already built rather than constructing new buildings entirely, which is much more expensive. Operating hotels in Harlem would require construction of new buildings, since there are no old hotels available to refurbish.

The obstacles don’t stop after the hotels are built. The businesses must be marketed. That costs more money. Reaching the maximum occupancy rates needed to really cash in can take years.

Overall, hotels are a riskier long-term investment than residential and commercial real estate developments and in recent years developers have opted for the relatively faster real estate cash grab. When it comes to building apartments or stores, long-term renters give developers a much quicker return on purchased property. Hotels can take years to turn a profit because there are no leases with contractually guaranteed revenue.

Running successful hotels in Harlem is not unheard of though. The historic Theresa Hotel operated on 125^th Street from 1913 to 1971 and was regarded as one of the most popular hotels in the city, attracting the likes of boxing great Joe Louis, President John F. Kennedy, and even Fidel Castro who stayed at there during his 1960 United Nations address.

Hotel Theresa was closed and converted to office buildings in 1971. The building was declared a city landmark in 1993.

“There’s been interest for years,” said Nikoa Evans-Hendricks, spokeswoman for the Central Harlem neighborhood development organization known as Harlem Park to Park. “There was a Marriott looking to build on the east side several years ago, but for a lot of those reasons they have not moved forward.”

Harlem is still a hotspot despite all its obstacles – or, maybe, because of them. The lack of land needed to build new hotels and cost of construction has opened up opportunities for bed and breakfast owners and shared lodging providers like airbnb.

“[Harlem] is one of their fastest growing markets,” adds Evans-Hendricks. “You’re talking about over 200,000 room nights according to the folks we’ve talked to. That’s a big number. Without having any hotels in Harlem, it’s become a huge market, one of their fastest growing.”

While airbnb has most of the short-term real estate and hotel services industries in an uproar across the city, Harlem niche hotel operators say it hasn’t affected them greatly.

Bed and Breakfast Owner Kellyn Tillers founded her business, Harlem Grand Bed & Breakfast – 343 West 122nd Street, back in 2007 before the neighborhood’s real estate renaissance officially began. She bought her three-story brownstone for $85,000 in 1999 and now rents out up to five rooms for up to $265 a night, a dramatic increase from when she first started. She says she’s actually done better in the age of airbnb.

“We’re existing on a very thin line,” she said, noting that most of her B&B clientele are looking for the more formal, yet homey service experience of a conventional bed and breakfast. “We’re not doing $125 a night anymore. Those days are done.”

Harlem Grand is one of at least nine bed and breakfast destinations listed in the neighborhood. These businesses cater to retirees and couples seeking the real New York experience, folks like Dustin and Rebekah Coles, a married couple from Portland, Ore. who visited Harlem Grand and the city for the first time in late October.

“Part of the allure of New York City is the way people live that actually are there day to day,” says Dustin, as his wife nods in agreement.

“This morning we went to breakfast at Patisserie Des Ambassades and it’s all locals coming in,” Rebekah adds with a smile. “We saw Marcus Samuelsson. He walked in with his wife. he lives in Harlem… It was nice to just be in a community and to feel, ‘What does this community feel like?'”

Harley on the other hand views airbnb as a direct competitor.

“It does affect us, but differently. I want it to be regulated,” she notes. “I don’t necessarily want it to go, but if we pay hotel taxes they should pay hotel taxes as well.”