The authors of Gotham, A History of New York City to 1898 relate the reasons the city hotel was built in 1794.
"So many transients arrived, for business as well as pleasure, that taverns and boardinghouses proved unable to accommodate the influx. This dilemna led to the construction of New York's first hotel in the modern sesnse-the five story 137-room City Hotel, which opened in 1794 on the west side of Broadway just north of Trinity Church. Besides room and board, it offered the facilities for public dining and dancing hitherto provided by taverns. Its gracious accommodations and excellent wine cellars were specifically designed to attract a wealthy clientele, and its "very handsome" street-level shopselegant barroom, and coffeehouse fronting Broadway became important mercantile gathering spots."