In a calculation that tourists will return to New York, a 1,046-key multibranded Hilton hotel development has landed a $75 million preferred equity investment.
Square Mile Capital Management said its backing of the project under construction at 150 W. 48th St. marked its fifth team-up with McSam Hotel Group. The investment was structured in conjunction with Adam Hakim and James Murad of Meridian Capital Group, Square Mile said.
McSam, with Sam Chang as its chairman, is a prolific New York developer in the hospitality sector, and the new Hilton property is expected to be one of the city’s largest hotels.
“This was an attractive opportunity to bolster our participation in the post-pandemic recovery of the New York City hospitality sector,” Square Mile Managing Director Elliot Rattner said in a statement. “We are confident that travelers to New York will once again want to stay in the center of all the city has to offer. ... This midtown Manhattan property’s unique location, brand affiliations, and diverse room offerings will create a compelling set of options for a variety of traveler segments.”
The property will feature a tri-branded Hilton hotel consisting of a 288-key Home2 Suites, 358-key Hampton Inn and 400-key Motto. They are among Hilton’s 18 brands worldwide, according to its website. Home2 Suites targets “value conscious” extended-stay guests of at least five nights.
Hilton’s website describes Motto as a “micro-hotel” with an “urban vibe” in “prime global locations.” It lists Hampton Inn as the industry’s leading “upper-midscale brand.”
The development follows other Hilton mixed-brand projects that aim to cater to different tastes. In 2018, the hotel group, alongside co-developer First Hospitality, opened its first tri-branded property including a Hilton Garden Inn, Hampton Inn and Home2 Suites adjacent to Chicago’s McCormick Place convention center. The brands share a single 22-story guest tower.
In New York, the McSam project is located between Sixth and Seventh avenues, just steps from Times Square. It’s also within walking distance of other tourist attractions including Rockefeller Center and Central Park. The Penn Station commuter hub is also nearby.
Amenities will include restaurants, lounges, coffee shops, exercise rooms, select meeting spaces, laundry facilities and a shared rooftop lounge, according to the statement.
The hotel is expected to open by the end of 2022.
Square Mile’s investment comes amid signs of a rebound for New York’s battered hospitality industry, which has seen properties including Hilton Times Square close permanently since the start of the pandemic.
Average New York hotel occupancy in the week ending June 5 jumped to 72%, the highest since early March 2020, according to hospitality data and analytics firm STR, a unit of CoStar Group, the parent of CoStar News. The average daily rate averaged $181.15, also the highest since March of last year.
In another example, the soon-to-open Margaritaville Resort Times Square has seen brisk bookings and commanded above-market rates.
Meanwhile, tourist foot traffic in Times Square itself has increased alongside a growing list of hotels reopening.