It has always been a challenge to find an affordable hotel room in the Hamptons, and now it’s about to become even more difficult. According to financial and real estate sources, a group of wealthy investment firms are buying up the last remaining budget-friendly hotels in the East End, with plans to renovate them and increase prices. One of the recent buyers is Blue Flag Partners, a hedge fund based in Boston, which spent $15 million to acquire Haven Montauk last month. This purchase came after Blue Flag spent $13.5 million in December to buy Sunset Beach Montauk, along with adjacent parcels and beach lots. Blue Flag’s owner, Jason Brown, stated that while this summer’s rates at Sunset Beach Montauk will remain in the $300 to $500 range, they will increase in the future as the properties are developed and rebranded. The Haven Montauk, a 27-room boutique hotel, is already charging high prices, with rates starting at $621 a night for midweek stays and going up to $1,291 a night on weekends. The limited inventory of hotels is a result of strict zoning laws that have limited new development in the area. However, the demand for luxury hotels in the Hamptons remains high. Real estate experts and brokers believe that private equity firms are taking advantage of the current distressed rental market in the Hamptons, as they see the potential for future price increases. Despite the rising prices, the Hamptons continues to attract visitors year after year, making it a desirable location for hotel development. In addition to Blue Flag’s acquisitions, other notable recent purchases include Gurney’s Star Island Resort and the historic Maidstone Hotel. The Hamptons is a market that lacks hotels, even though there is a constant demand for accommodations. The hope is that new hotels will be created to meet this demand while still maintaining the unique identity of the area.
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