How are Hotels in Manhattan Doing?

Why do I care about hotels in Manhattan? Stay tuned for coming posts about Morgans Hotel Group (MHGC). Meanwhile, take in this background information:

"Hotel occupancy in the city fell about 5 percentage points in December, to 76.3%, according to Smith Travel Research, a level not seen since 2002. The average room rate dipped 10%, to $297.15."

"Mid-town Manhattan hotels were offering deals for New Year's Eve!"

Business drying up for Manhattan hotels:

“I don’t think anybody realized the switch was going to be turned off so quickly,” said Lisa Grossberg, the general manager of the Buckingham Hotel in Midtown Manhattan. “We saw people being more rate-conscious; we saw the renegotiations of corporate contracts as companies tightened their belts in the fall. But then in the middle of December, everything just about stopped.”

NYTimes reports glut of new hotels has pushed down room rates:

"...the discounts are an opportunity to stay at upscale, amenity-laden properties for what they normally might pay for a more moderate hotel without the latest perks."

"...the Thompson LES, a new boutique hotel on the Lower East Side... The listed rates for the rooms, with Sferra bed linens, slate bathrooms with rain showerheads and Kiehl’s toiletries, begin at $375 a night. Ms. Alexander paid $149..."

"The GEM Hotel and Wyndham Garden Hotel, both of which opened in [Chelsea]... in November, offered introductory rates starting at $189 at that time. Now, their rates start at $159 and $169."

"New York City had the most openings for the 12 months ending in November, with 54 new hotels adding 7,982 rooms to the mix. In the Miami area, 20 hotels, with 4,155 rooms, opened."

Ouch

Big rally today, obviously.

"Timmmmay" Geithner is supposedly announcing a plan on Monday afternoon. What a credulous group of investors we have to bid up garbage equities so much on such a flimsy basis.

I shorted more REITs (MPG, MHGC, MAC). I am increasingly bearish on the office, hotel, and retail REITs based on what I see in the restructuring business.

President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

Short

I am very short right now. Have been covering COF and selling BBY, MHGC, MPG, etc.