Hotel & Motel Management - September 18, 2007 - (Page 52)

52 Construction INVESTMENT COSTS H&MM September 18, 2007 | HotelMotel.com www.HotelMotel.com/digital_edition Markets dictate renovations, new builds IN THE details Weighing the options Developers must make decisions about investments based on location and land costs in given markets. While building new is appealing, renovation can be more cost effective. Renovations make sense New builds take patience Land costs are prohibitive By Stacey Mieyal Higgins SENIOR EDITOR IN THE works Candlewood Suites, a brand of InterContinental Hotels Group, opened its ﬁrst hotel outside the United States in Montreal. Formerly a high-rise apartment complex, the new midscale 147-room Candlewood Suites Montreal-Centre Ville has suites equipped with a full kitchen, a large workspace and DVD and CD players. aloft, a brand of Starwood Hotels & Resorts Worldwide, partnered with Continental 191 Fund LLC to break ground on its ﬁrst hotel in Illinois — the 251-room aloft Chicago O’Hare, to open in 2008. Starwood Hotels & Resorts also inked deals with four development groups to open seven aloft hotels in Texas. Sites are: Las Colinas, Plano, Frisco, San Antonio, Grapevine, Houston and Dallas. Groundbreakings are slated for 2007 and 2008. Also, the company broke ground on the aloft Charleston Airport & Convention Center. The 136-room property is a joint venture of SREE Hotels LLC, and LTD Management Co. Starwood Hotel & Resorts Worldwide and the Soleil Group began construction on their debut property in Raleigh, N.C., the 290room, 54-residence Westin Raleigh Hotel & Residences at Soleil Center, to open in 2009. The 43-story property has 30,000 square feet of meeting space. Marriott International broke ground on the ﬁrst Hispanicowned Marriott property in Washington, D.C. The Courtyard by Marriott, which will feature a “green” roof, is set to open in 2009, and will be located in the new North of Massachusetts Avenue Business Improvement District. Compiled by Stacey Higgins, shiggins@questex.com The Hilton Garden Inn Portland (Maine) Downtown Waterfront was built in a historic district, which required collaboration with the city’s preservation committee. T he development decision to invest in a property through renovation or build from scratch is never easy, but often is made by existing factors of a property or location, according to hotel developers. Cory Jackson Jr., president of Jackson Hospitality Services in Birmingham, Ala., said land costs and location are the primary issues when considering a new build versus a renovation of an existing property. “We prefer not to renovate, unless there is something attractive in the mix, primarily the uniqueness of the site,” he said. The company is planning to renovate its 150-room hotel on the campus of the University of Alabama in Tuscaloosa, to retain the site and the only hotel on campus. “In that case, a full renovation and repositioning makes a lot of sense,” Jackson said. “Just like in downtown urban markets, the cost to demolish an existing building becomes cost prohibitive.” On the other hand, barriers to entry can make new builds attractive and lucrative for the right developer, according to Jim Brady, president of development for Portland, Maine-based Olympia Cos. The company recently built Hilton Garden Inn hotels in historic districts in Portland and Portsmouth, Maine. “We try and identify speciﬁc markets that we think are strong markets from a [revenue per available room] standpoint, then identify sites and the brands that are the right ﬁt in that marketplace,” Brady said. The challenge of working with local historic preservation groups can be too much for some, but Olympia prides itself in taking on that challenge, he said. “It requires a different level of sophistication and expertise,” Brady said. “Not every developer has the patience … It creates an economic advantage.” At the Tuscaloosa property, Jackson’s company is hoping a $5million renovation to a 21-yearold property will reposition it to a four-diamond hotel. “When doing a renovation, typically no matter how much money you throw at it, you still have a 30-year-old hotel at the end of it,” he said. “Most project budgets don’t address the mechanical needs a building might have.” The Tuscaloosa project requires half a million dollars be spent to replace original mechanical systems. The project, which is scheduled to begin late this year or early 2008, will include full restaurant and kitchen renovations. Jackson said the hotel will have a 10-year capital improvement plan to address other major issues. While the project is a “severe” renovation, according to Jackson, it’s the location that kept the company from selling. “In older hotels, you’re typically stuck with a smaller bathroom and other physical restraints to the building,” he said. “It can be hard to bring it up to 2007 customer standards. “If I was in a fourth-tier market in small-town Alabama, I probably wouldn’t look at an older property to renovate, but the land costs should not be so prohibitive, either,” he said. shiggins@questex.com Chateau on Lake of the Ozarks John Q. Hammons will develop a 30-acre waterfront location at Lake of the Ozarks in Osage Beach, Mo. Inspired by Hammons’ extensive study of chateaus and castles of the world, the 15-story, 320-rooms and suites, European-style property will be called Chateau on Lake of the Ozarks, Osage Beach, Mo., and will feature a spa and more than 100,000 gross square feet of meeting space. The hotel and exhibition center will be owned by Hammons and managed by Springﬁeld, Mo.-based John Q. Hammons Hotels & Resorts. The property is slated to open spring 2010 with construction expected to begin spring 2008. JOHN Q. HAMMONS HOTELS & RESORTS OLYMPIA COS. http://HotelMotel.com http://www.HotelMotel.com/digital_edition

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - September 18, 2007

Hotel & Motel Management - September 18, 2007 Contents Vista Inns Redefines Business Model Conley Applies Satisfaction Theory to Boutique Hotels Questex Acquires Oxford Publishing Perspective At Your Risk Consultant’s Corner Sales Clinic Travel Trends On Finance Franchise Law Cornell Insights HotelWorld Update Training Trends Satisfaction Trends Management Trends Speakers Named, Registration Open for IH/M&RS Going Green Saves Green Trends & Stats Vacuums Go the Extra Mile Transactions Offsetting Emissions is Newest Sustainability Initiative Minibar Advancements Supplier News People on The Move ADA Compliance Can Be Easier With Programs Business Travelers Interested in Remote Check-In/Out Awards Markets Dictate Renovations vs. New Builds More Development Opportunities Available Top Hotel Companies Survey The Lodging Conference Previews Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - September 18, 2007

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