The developer of the Margaritaville Resort Times Square, a hotel now slated to open in late spring, said New York has never had a lodging property quite like it: a newly constructed, tropical island-themed site boasting the city’s first year-round heated outdoor pool. The property even houses a synagogue.

But the $300 million development at 560 Seventh Ave. faces significant challenges by debuting in the pandemic, which has permanently shuttered hospitality destinations throughout the five boroughs and sent hotel vacancy rates soaring. Nonetheless, Soho Properties, the Manhattan firm that’s completing construction of the project with 234 rooms and 32 stories, said early signs of a turnaround in the Big Apple bode well.

Sharif El-Gamal, Soho Properties founder and CEO, acknowledged that it’s been a difficult time for New York. The pandemic last year led to the demise of the Hilton Times Square, located at 234 W. 42nd St., among other hotels, as well as the foreclosures of hospitality properties. But El-Gamal said change is coming for the better, partly because of the rollout of coronavirus vaccines.

“I think we’re going to start seeing that the city is going to start opening much more consistently and regularly in the coming weeks and in the coming months,” said El-Gamal, who contracted COVID-19 in the spring last year. “And we want to be one of the engines that’s going to help with the opening of the economy of New York at the same time. So there’s a lot of motivation here. As a New Yorker, we’re so excited that we have the opportunity to bring forward a one-of-a-kind resort into one of the main arteries of New York.”

The hotel is part of the ever-growing national Margaritaville resort chain, a tourist-targeted concept inspired by the lyrics and laid-back-lifestyle musings of singer, songwriter and bestselling author Jimmy Buffett. It has debuted hotels during the outbreak, including one in Jacksonville Beach, Florida, and recently undertook hotel conversions in San Diego and the Houston area. The Times Square resort is the first in the Northeast, and the chain envisions it as establishing a high-profile flagship for the company.

“We’re just excited to be in Times Square,” said Jim Wiseman, president of development for Margaritaville Holdings. “It’s a seminal moment for us to the next level for the brand.”

But the hospitality industry in general, and in New York, is facing a yearslong recovery that could challenge Margaritaville Times Square depending on how fast leisure travel rebounds. After all, communal swimming pools are hardly big draws in the era of social distancing.

The hotel is located on the corner of Seventh Avenue and West 40th Street, near the attractions of Times Square and Broadway and not far from the Port Authority Bus Terminal. It occupies the former site of the Parsons School of Design’s fashion campus, which was torn down to make way for the new ground-up construction.

Plans for the hotel were announced in April 2018. It features a Jimmy Buffett’s Margaritaville restaurant, a rooftop LandShark Bar & Grill, 5 O’Clock Somewhere Bar, Tiki Bar and an all-new concept, Chill Bar. IMCMV Holdings will operate those five food-and-beverage venues.

While these amenities could seem like a tough sell during the coronavirus outbreak, hotels are designed to span decades and planners have to keep moving forward, said Jan Freitag, senior vice president of lodging insights for STR, CoStar Group’s hospitality analytics firm.

"Hotels open in a pandemic, ... continue to be built, continue to open, just because they were planned three or five years ago,” he said. “And they are supposed to be open for 10, 20, 30 years." Against that backdrop, he said, the pandemic's economic fallout just from a planning standpoint is "a blip on the radar in the lifetime of a hotel.”

The Margaritaville property also includes lower-level retail space and a synagogue, the Garment Center Congregation temple. When Soho Properties acquired the property from Parsons, it had to negotiate a deal with the synagogue, which had a long-term lease at the property, and it secured a spot in the new hotel building.

New Yorkers have long turned up their noses when it comes to national chains, but they aren’t Margaritaville’s target customer: domestic and international tourists are. The hospitality chain, which has 20 projects in its pipeline for the next 18 months, had been looking for a location in Times Square for more than eight years because “it’s where all the tourists go,” according to Wiseman.

“We always felt Times Square was a great market for us,” he said. “Obviously Times Square in general is just a great place. ... We looked at the Brill Building, we looked at some other renovations and just never could find the right deal, and this came along as a new build, which was extremely unusual. So that’s really was appealing for this.”

El-Gamal said it will be an advantage, too.

“It’s a brand-new building, and I think that’s going to set us apart leap years away from our peers,” he said. “We’re going to be the only new hotel in Times Square.”

El-Gamal is betting the Margaritaville concept will be greeted as a breath of fresh air to the New York lodging landscape.

“It’s a unique experience between the restaurants and the outdoor year-round heated pool, the island-inspired design,” he said.

The hotel’s customer base is “anybody that wants to have fun,” and that includes more than tourists, according to El-Gamal.

“First and foremost, our objective is to offer a paradise escape to those living and working in New York, where they can unwind and grab a bite by the outdoor heated pool,” he said. “Business travelers will have a one-of-a-kind perk located right in the heart of Manhattan. We also expect to welcome tourists from all over the world as travel restrictions ease. But we’re particularly excited to welcome guests from the tri-state and regional Northeast area. This will be a drive-to destination. And I think that’s going to be one of the focal points. This year is going to be about catering to the American public as travel restrictions around the world ease.”

The borders of the Times Square and Garment District neighborhoods blur. And the Margaritaville hotel falls within the area covered by the Garment District Alliance, a central business district group. Barbara Blair, the alliance’s president, said she expects the new hotel to reinvigorate her district, bringing people into the neighborhood.

And she predicted it will draw Manhattan workers and commuters to its bars and restaurants for after-work drinks, not just attract the tourist trade. There’s been a dearth of higher-end hotels and larger restaurant-bar venues in the area where the Garment District borders Times Square, according to Blair.

“It has lots of hotels in it, but many of the hotels are budget hotels and tend to be west of Eighth Avenue,“ Blair said. “And the fact that this is a big, bright really, resort hotel that will have bars and restaurants and a pool will — really even though it’s being called Times Square — will be an indicator that this is a central business district and the mental boundaries that we have in our mind are really falling away.”

And the city’s existing hotels don’t provide the kind of “experiential” environments that the public has come to seek, according to El-Gamal.

“People don’t want to go to graveyards anymore,” he said. “When you look at select-service hotels, they’re a thing of the past. People want to go to places where there’s energy, where there’s life, where there’s activities, where there are things to do. Just going to a side-street venue or hotel, I really think that’s a thing of the past and why all these mega brands are really looking to build lifestyle offerings within their portfolio. And here we have something that’s grown organically over the last 40 years that really caters to the way that people want to have fun, the way that people want to escape and get out of the routine of their days and of their weeks.”

Times Square hotels for the first three quarters last year performed just a hair behind New York lodging properties overall amid the pandemic, with revenue per available room down 74%, compared with 72.6% for the entire city, according to Mark VanStekelenburg, executive vice president and practice leader for real estate firm CBRE’s hotels advisory group.

But the competitive landscape that Margaritaville Times Square will face going forward this year is unclear.

“It’s tough to say where ultimately the supply side will end up,” VanStekelenburg said of New York hospitality properties. “We’re still tracking about 230 projects with 36,000 rooms in the pipeline. Obviously, a lot of those have been deferred or delayed. In addition to that, there are rumblings about a lot of properties potentially not reopening. The confirmed list of properties is still fairly short though. I think we’re racking about 6,000 rooms that have announced their permanent closures with a large list of unconfirmed. It’s difficult to say what’s going to happen there.”

Using occupancy as a measure, last year during the pandemic, hotels in Midtown West and Times Square averaged 40.9% full, down 53.6% compared with 2019, according to data from STR. So they performed worse than New York hotels overall, which averaged 46.7% occupancy, a drop of 45.9%.

“When things were good for New York, Times Square did better,” Freitag said. “When things are bad for New York, Times Square does worse.”

The bellwether for Times Square hotel performance this year will be when Broadway theaters reopen, according to Freitag. The Broadway League, which represents the theater industry, has said shows will remain closed until at least May 30.

“I think there’s going to be leisure travel to New York City and to Times Square, but those are just one-off individual people and maybe small families,” Freitag said. “You’re going to have some corporate-travel demand come back as well, but the real engine of the American hotel economy is group travel and then these large groups of leisure travelers going to the museums and going to Broadway, and that’s going to be a while.”

Lower-priced hotels are expected to recover quicker than medium- and higher-priced properties, VanStekelenburg said.

He declined to comment on the Margaritaville Times Square specifically. But he said hotels with an “entertainment branding and following” that “create a critical mass and a scene” may have an easier go of it this year. That’s because those kinds of hotels tend to average more guests per room, creating a “value proposition” for visitors that can make a stay more attractive financially, according to VanStekelenburg.

Margaritaville Times Square had been slated to open last fall, but delays from COVID-19 restrictions on construction pushed back that date, El-Gamal said.

“Taking those extras measures that we did for the people that work with us obviously cost us time but it ensured for everyone’s safety,” he said. “And we were one of the only projects that really worked fully through the pandemic due to the thoughtfulness that we conducted ourselves with.”