Hoteliers Recycle History
<B>Hoteliers Recycle History</B>
By Bruce Serlen
With travelers looking for ease of access, hotel chains are putting more emphasis on developing sites in prime urban business locations. But such sites are becoming increasingly scarce and hard to develop. One solution to the dilemma developers have found is to convert historic center city buildings into hotels.
Ritz-Carlton Hotel Co., for example, in June will open its 330-room Philadelphia property in two adjoining landmark buildings, the former Mellon Bank Rotunda and Tower. Likewise, Regent International in January opened a 144-room property on Wall Street in New York City in a Greek Revival structure that was originally the Merchants Exchange. Also in New York, Starwood Hotels & Resorts Worldwide announced that its newest W Hotel will open later this year on Union Square in the landmark former Guardian Life Insurance Building.
"The trend will likely continue, where the development makes economic sense, as long as these gateway cities remain in such strong demand for lodging," said Jim Burba, senior managing director of Insignia/ESG Hotel Partners, a real estate brokerage firm.
If travelers' business takes them into the central business district, location in the choice of a hotel can be a key factor, said Wendy Nathan, manager of travel services for New Brunswick, N.J.-based Johnson & Johnson. "If the property is unique in its design, which landmarked buildings usually are, it can make the hotel even more attractive."
Assuming rates and other considerations are equivalent, the experience of staying in a landmark structure can be "special," said Alison E. Guilbeaux, manager of business development for corporate hotel programs at WorldTravel Partners in Atlanta. "In fact, there are travelers who will go out of their way to stay in them because they are so unique."
The high barriers to entry in these cities often can make new construction difficult and time consuming. "Available land for building is typically at a premium," said Phil Keb, vice president of development for Ritz-Carlton. "And zoning approvals alone can be a major hurdle time-wise."
By working with an existing structure, one that is often in an urban renewal district, zoning matters can be less of an issue. "In addition, the community is likely to be pleased that the property is being adapted in a creative way," Keb said, which makes for a positive relationship when the property is ready to open.
"The amount of cooperation you tend to receive from the community can be tremendous," said Thomas R. Trout, vice president for planning and design at Regent International Hotels. "This includes approval from companies whose headquarters are nearby, which you're going to want to be among your customers."
In many cases, the project also is eligible for tax benefits because the structure is historically listed. "The tax credit in these situations can be applied to a percentage of the hard construction costs," Keb said.
Many of the interior features of these projects, particularly in the public spaces, are of special beauty or historical significance. The soaring Ionic columns and carvings designed by famous architects McKim, Mead and White in the rotunda of the Ritz-Carlton Philadelphia are an example.
"A number of these projects were former banks, which makes sense because the lobby level of a 19th century bank tended to be quite grandiose, almost like a cathedral," said Thierry Roch, executive director of the National Trust Historic Hotels of America. "Floors above the lobby would contain offices, which can be converted into guest rooms."
Construction costs associated with restoring grand finishes such as these may be "not that much more than the cost of adding such luxury touches as elaborate marble, millwork and grand entrances in a new building," Keb said.
Outside the United States, Fours Seasons Hotels & Resorts has taken the lead in converting historic properties to hotel use, especially in Europe. "Our projects in two Eastern European capitals, Budapest and Prague, opening this year, are both in buildings that have a prominent location downtown, close to the river, that couldn't be duplicated," said David B. Crowl, vice president for sales and marketing for Europe, Middle East and Africa. "Historic touches are important, but what's really crucial is the location. For the business traveler, there's convenient access certainly. But as a deluxe brand, we intend each of our hotels to be one-of-a-kind--at the center of the city's business, social and cultural life--and these prominent locations reinforce that."
Not that the trend of historic hotel conversions is restricted to four and five star, deluxe and upper upscale properties. The 498-room Courtyard by Marriott Philadelphia Downtown Hotel, for example, opened late last year in the former City Hall Annex, which was originally built in 1926. Similarly in Washington, D.C., Marriott opened the 188- room Courtyard Convention Center last summer in a former bank building that originally dates to the 1890s.
Like their four- and five-star siblings, these projects boast distinctive touches that would be hard to replicate today. The boardroom in the Courtyard in Washington, D.C., for example, is situated inside the actual vault of the turn-of-the-century former bank and features the original 20,000-pound vault door.
Yet, the location of these projects is really key to their success. "While the conversion of a historic building has an obvious esthetic appeal, not every structure is suitable," said Bob Deeley, regional vice president for lodging development for Marriott. "In fact, these projects tend to come with as many challenges construction-wise as opportunities.