Deluxe Hotel Cos. Undertake Multi-Use Developments
<B>Deluxe Hotel Cos. Undertake Multi-Use Developments</B>
By Bruce Serlen
Such deluxe hotel companies as Four Seasons Hotels & Resorts, Ritz-Carlton Hotel Co. and St. Regis Hotels & Resorts announced expansion plans this spring that rely heavily on multi-use developments that combine hotel and condominium apartments in key U.S. cities. One such project that opened this month, however, goes a step beyond providing traditional guest rooms and suites to include high-end extended stay accommodations.
A project in Boston is part of the multi-use complex being created by Ritz-Carlton in conjunction with Millennium Partners, a real estate development firm.
Officially known as The Residential Suites at the Ritz-Carlton Towers, the project consists of 63 one- and two-bedroom units of up to 1,300 square feet and 1,600 square feet of living space, respectively. It is designed for guests staying two weeks or longer, which is somewhat at a variance with the traditional five nights or longer industry definition of extended stay.
"We decided to use a 15-night minimum length of stay requirement, knowing that stays under 15 nights can be accommodated at the Ritz-Carlton Hotel Boston Common, which has 192 rooms in the other of the two towers that comprise the project," said Donna Crotty, general manager of The Residential Suites.
The Residential Suites itself comprises six floors of its tower. The remainder of the 36-story building is devoted to high-end condominium apartments, though the base of the building contains some retail space.
Access to the extended stay units is through The Residential Suites' own separate lobby.
For the U.S. extended stay industry, the Boston project is further proof of the overall health of this lodging segment. The Highland Group, an Atlanta-based consulting firm that studies extended stay, already divides the various brands involved into upscale, midprice and economy.
According to Mark Skinner, a Highland Group partner, the weekly rate for the upscale categories is in the $500 and above range. Such extended stay brands as Hawthorn Suites, a unit of U.S. Franchise Systems; Residence Inn, which, like Ritz-Carlton, is part of Marriott International; and Homewood Suites by Hilton are examples cited by Skinner of upscale brands.
Given Ritz-Carlton's typical pricing, upon which Boston's Residential Suites' rates are based, the project plainly raises the upscale category to a new level.
Crotty said The Residential Suites was following the accepted extended stay pricing model.
"A nightly rate applies for the first 29 days just like a hotel," she said, "while a monthly rate starts on the 30th day. Rates are then adjusted at the three-, six- and 12-month points."
For legal reasons, guests sign a "use and occupancy" agreement that resembles a lease at the time the monthly rate begins.
To attract corporate travel managers to the property, the Residential Suites' Crotty is working with her own sales team, as well as the team in place at the Ritz-Carlton Boston Common.
For buyers who already have national account status with Ritz-Carlton, the new property is the chance to bring their extended stay nights in Boston to bear in increasing their negotiating position in that city.
Similar to other projects that Ritz-Carlton has underway with Millennium Partners in New York and Washington, the Boston project uses the power of the Ritz-Carlton brand name to help market the condominium apartments. Part of the appeal certainly is that apartment residents have access--at a price--to deluxe-level hotel services.
Millennium also is working on multi-use developments with Four Seasons in San Francisco and Miami.
Meanwhile, St. Regis, which is part of Starwood Hotels & Resorts Worldwide, is working with a separate developer on a similar project in San Francisco.
To date, the Boston Ritz-Carlton/Millennium partnership is the only one of the bunch to identify a portion of the hotel component as extended stay units--and then to brand these rooms as a separate entity.
In Europe and Asia, there has been more of a tradition of "corporate apartments" managed by hotel companies, geared mostly to U.S. business travelers on long-term foreign assignment.
"There's no question that the hotel brands are an asset in selling the condominium apartments," said Christopher Jeffries, president and CEO of Millennium Partners, which is based in New York. "These are brands that represent the very best. Their reputation allows us to charge a higher price point." In fact, Jeffries compared the deluxe hotel brands to high-end brand names in the fashion industry, which also command a premium in price.
Millennium's multi-use developments have made such an impact on the lodging industry that Jeffries was the recipient of the "Deal of the Year" Award at last month's annual NYU Hospitality Investment Conference in New York.
Previous recipients included Stephen Bollenbach of Hilton Hotels Corp. for the acquisition of the Promus Hotels Corp., and Barry Sternlicht for putting together the hotel companies that became Starwood.
The hotel services accessible by both transient guests and, in the case of the Boston Residential Suites, extended stay guests are a significant part of the appeal to potential apartment owners.
"Based on your needs, you have a selection of services to choose from, ranging from maid service and room service to banquet service in your apartment," said Stan Bromley, regional vice president and general manager of the upcoming Four Seasons project in San Francisco, which is scheduled to open in September. "We also provide you with concierge service that is of the quality of that service of the hotel because we are providing it.