Thoughts on the closing of the Waldorf=Astoria, NYC

Last week, almost lost among the fallout of the Brexit vote, and the Fourth of July holiday was what amounted to a meeting and events bombshell in New York. It's impact and the short and long term consequences may take years to fully come to grips with.

Anbang Insurance Group Co. owner of the Waldorf=Astoria hotel formally announced what had long been suspected. It was planning to close the storied property beginning in 2017 to convert over 1000 guest rooms into luxury condominiums. When it reopens, the hotel will be much smaller, with only 300-500 guest rooms versus the over 1400 it has today.

As I read this news, I was stunned. Having produced numerous events at the Waldorf over the years, it was hard to believe that the fabled hotel would simply cease to exist as we know it. I am sure many others in the NY market feel the same way.

But looking beyond simply saying goodbye to a city icon, the immediate and long term problem for those of us in New York City events market is twofold. First, dealing with the loss of over 500,000 bednights a year in 2017-2020 and permanent loss of over 350,000 bed nights a year in a city already short of hotel rooms. Granted, there is currently a mini hotel building boom in the city with many new properties being opened. But these are almost all limited service hotels which cater to tourists or small groups. They do not have the capability to host conventions, trade shows or larger corporate events. So beyond the loss of bednights, the Waldorf closure creates another problem for corporate event planners.

Virtually overlooked by all the news articles which focused primarily on the loss of guest rooms, is the significant loss of meeting space in Manhattan, even temporarily. In the corporate event area where I typically work, this loss is huge. Sometimes event space must be booked a year or two in advance. What will happen to all the events that booked space for 2017? Where will they go? I am sure there are clauses in the contracts to cover this situation, but finding suitable alternative meeting space in NYC on short notice is not going to be easy.

The Waldorf has four ballrooms including one of the largest in NYC. It also has one of the largest inventories of other event spaces in various sizes. It hosts countless corporate, association, society and social events every year. Some events book at the Waldorf not for the name, but simply because it was the only space in the city that can handle their meeting capacity. Located on Park Avenue and surrounded by countless corporate headquarters, the Waldorf was also a convenient location to host all types of corporate meetings and events, as its location allows executives to quickly come over, speak and then return to their offices. There are no comparable alternatives nearby.

No details have been released on the plans for the existing hotel meeting spaces either, but with guest rooms being reduced by nearly two thirds, it is most likely that number of meeting spaces at the new Waldorf will also be permanently downsized. With the loss of these meeting rooms, event planners are faced with difficult choices as they adjust their event requirements to the new landscape.

One thing is clear, the impact of this loss of meeting space is going to be with us for at least three years and probably longer. It will only serve to increase the demand, competition and ultimately the cost for the remaining event spaces. This in turn will continue to fuel the sellers market in NY and leave planners with fewer options in their venue negotiations, as more events will now be competing for their share of a smaller event space inventory.

On the AV side, while I will not miss the difficult discussions associated with explaining the cost of staging an event at the Waldorf to clients, I am afraid that this problem will now only shift to other venues. With fewer space options to choose from, venues are going to be less likely to reduce or wave the extra fees they charge clients when using an AV provider other than their in-house company. It is also quite likely that the cost of in-house AV in the city will go up or that new costs and fees may begin to appear.

Yet experience shows that in-house AV, while fine for some meetings, may not always the best choice for every events needs, leaving event planners with a difficult decision, either use an in-house AV company that may not be right for their particular event, or incur additional costs.

Resolving this difficult dilemma requires timely, accurate information. AV is typically something that is thought of late in the planning cycle and this often results in unplanned and unexpected costs. Now more than ever when working in NY, it is important to involve your AV producer or AV provider as early as possible, preferably right from the start of venue selection.

Working with a producer or provider familiar with the NY market can help avoid a lot of those unexpected and costly surprises. They may not be able to make all the additional costs go away, but at the very least, they can make planners aware of the total AV costs up front, to allow them to make informed decisions regarding their AV spend. They can determine the exact nature of the fees likely to be imposed on your event and their impact on the overall AV budget. They can advise on which fees are most likely negotiable and which are not. They can prepare cost comparisons which break down the fees between various venues to better aid in contract negotiations. If contracts have already been signed, they may be able of suggest options or alternatives to structure the AV in a way to minimize the impact of the fees incurred.

The Waldorf closing will result in new challenges and most likely increased costs for events on NY overall, but working with their AV producers and providers early on can help event planners minimize those costs in their AV budgets.

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