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December 20, 2013
Three Trends for Hip Hotels in 2014
While we like to consider ourselves experts on hotels (in so much as navigating room-service menus), we leave the trendcasting to trusted advisors. Here's what you'll be seeing next year:
1) Food & beverage makeovers
Hotels are focusing on more attractivefood and beverage spaces, especially in urban markets, HVS Global Hospitality managing director Hans Detlefsen, snapped with his family, tells us. (In that case, they should just line the walls with pictures of Tom Selleck.) It's playing out through rooftop bars and specialty chefs. Kimpton properties like the Hotel Palomar also do a great job at creating unique experiences, Hans says, putting an end to the "hotel food" stereotype.
2) Multiple brands under one roof
Developers are testing out multi-branded hotels to see if the ROI is there, like White Lodging's 664-key aloft (above), Fairfield Inn & Suites, and Hyatt Place in Chicago's River North. The logic: compared to building brands separately, you can save on construction and operating costs. For example, you'd build one swimming pool instead of two and consolidate staff. The brands then offer exposure to more channels of customers at a wider variety of price points. But it's too soon to tell if the idea makes sense compared with building a single-branded hotel with a larger room count and if the extra demand makes up for the added cost, Hans tells us.
3) Shrinking room sizes
Experimentation with smaller hotel concepts and room size is a medium- to long-term trend, Hans predicts. (Ok, they probably won't take it this far, above.) We might see a hostel-inspired hybrid that blends the micro-unit concept with successful common-area elements of traditional hotels. Reducing amenities to have a more efficient product will get developed and tested over the next decade. We'll likely first see it in markets oriented toward leisure travel, like gateway cities with lots of international visitors. European and Asian customers are already accustomed to lodging products with very small guest rooms, Hans tells us.
PHILADELPHIA: Dranoff and Nazarian Unveil New Hotel
At 47 stories, it will be hard to miss SLS International, the mixed hotel and residential project Dranoff Properties and sbe have planned for the Avenue of the Arts. This week, Carl Dranoff and sbe CEO Sam Nazarian unveiled the project at the Kimmel Center, across from the underutilized stretch of Broad Street where the KPF-designed skyscraper will rise and include 150 hotel rooms and 125 luxury condos. The name of the development is partly a nod to Gamble & Huff's hitmaking Philadelphia International Records, whose offices were located at the site. (No word yet if hoteliers will wear polyester in tribute.)
"Philadelphia's hotel market is booming, with room rates and occupancy rates going up," says Carl (whom we snapped at this week's Bisnow NJ Multifamily Summit). He thinks the planned W Hotel will help business at the Convention Center. As a boutique, SLS International will target biz travelers and tourists attracted to the nearby, walkable shopping and entertainment, he says, and he's confident Sam's SLS brand will bring new energy. It's the first hotel-slash-condo concept in 25 years, "but taller, sleeker, and with more sophistication and amenities, which are ingredients needed for success," he says. He's particularly excited about the "amazing" F&B operations Sam is bringing to the table.
HOUSTON: Hyatt Comes to Hot Galleria
If you truly shop 'til you drop, to the point of needing bed-rest, then you're in luck. A Hyatt Regency has broken ground in the Galleria Plaza complex. SongyHighRoads (above, its CEO David Songy) and The Carlyle Group purchased the site earlier this year and are building the 14-story, 325-room hotel. Songy COO Todd Nocerini tells us the hotel is step one in upgrading that whole complex and making it true Class-A, mixed-use. It already includes two office buildings totaling nearly 400k SF and almost 30k SF of retail on 7.6 acres, and Todd tells us it can add more retail and other uses.
The Galleria is one of the top hospitality submarkets in the country, with average hotel occupancy over 77%. The new property, above, should be a welcome addition; most existing full-service hotel inventory there is over 20 years old. And Todd's excited to bring the Hyatt Regency brand there, including its 24/7 marketplace concept. The 260k SF property is designed by Gensler and being built by McCarthy Construction. It'll include 15k SF of meeting space and will be managed by Aimbridge Hospitality when it delivers in late summer 2015. Todd tells us Songy is eying several other opportunities in Houston.
CHICAGO: 2014 Forecast Even Hotter
Reports of the hotel market's health are not greatly exaggerated, Property Valuation Advisors' Brian Flanagan (snapped with the kids in West Yellowstone, Montana) tells us. Average daily rates should continue to climb while occupancy will stay about the same, he predicts. (A lot of people want to use towels that aren't their own.) The biggest stories will be the shiny new product dotting the skyline, which could have a detrimental effect on existing hotel supply. But the past couple of years have treated hotels well, so they should have the money to catch up property improvement plans. All segments of the market are trending up, but the future's looking especially bright for luxury players. "They've hit a point in time where they feel they can really start cranking rates," he tells us.
NYC: Qatar's Bite of the Big Apple
InterContinental Hotels Group has announced that it'll sell an 80% interest in the InterContinental New York Barclay at 111 E 48th St to Constellation Hotels Holding out of Qatar for $240M. It's quite the New York asset, built in the Roarin' Twenties by the Vanderbilt family. The JV will refurbish the 685-key hotel (86 of the units are suites) over 18 months for $175M (split 80/20), and IHG secured a 30-year management contract and two 10-year extension rights. The deal is expected to close in Q1.
SAN FRANCISCO: Pebblebrook's Big Plans for Fisherman's Wharf
Pebblebrook recently picked up the 355-room Radisson Hotel Fisherman's Wharf and retail for $132M from Square Mile and has plans to spend millions more on the site. (Good, we're not the only one who gets upsold on the Wharf.) Pebblebrook finance head Matt Partridge tells us closing was "complicated" because 44k SF of ground-level retail is attached and has a ground lease with 48 years remaining (only two years less than Robinson Cano's new deal). CEO Jon Bortz, above, was attracted to the property's diverse income streams, including retail revenue from tenants like CVS, Johnny Rockets, and IHOP.
Jon sees the site as a big fixer-upper and plans to invest $18M to $20M in the next two years to renovate all rooms and public areas, inside and out. The new design under Pebblebrook's watch will be overseen by Dawson Design Associates, the same team that repositioned the company's Hotel Zetta. Renovations will start in the Q4 '14, and the company plans to rename the property after they wrap up. (No decisions have been made yet about the flag.) Pebblebrook already has a solid presence in S.F. and owns the nearby Argonaut Hotel and three others across the city.
A Bisnow Education Video!
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We wish you a Merry Christmas and a Happy New Year! (Now where's our figgy pudding?) Email story ideas to amanda@bisnow.com.
