Recent initiatives by MCR, JL Capital, Indian Hotels Company and Generator show how developers are bringing their hotels into built destinations.
A flurry of recent stories highlighted how global brands plan to build thousands of hotels in China. But the sensational headlines overshadowed a subtle but important trend other. Developers find ways to open hotels in already densely built-up travel destinations.
It’s the details that are interesting, i.e. which developers, how and where.
Over the past two weeks, we have seen representative announcements in the following hotspots:
- Miami Beach, Florida.
- Oahu, Hawaii.
- Chenai, India.
- Times Square, New York.
Zoning laws are often an obstacle when there are few pristine sites. Hotel developers are therefore looking for workarounds such as upgrading existing properties.
- In miami beach, The Freehand Hotel is looking for a seven-storey extension.
- It wants to move from a current 89-bedroom property to a 142-bedroom property on 46,264 square feet of construction.
- Generator is the London-based company that owns the Freehand boutique hostel brand, through a subsidiary, Freehand Indian Creek.
- Going up is the plan. Current structures at Freehand Miami do not exceed four stories. The owner wants to demolish them and build up.
- Next month, the company will seek permission from the city’s historic preservation watchdogs.
In Hawaii, authorities have been supportive of mixed-use projects.
- J.L. Capitala real estate and private equity firm, said on April 13 that it chose high door manage his new Renaissance Honolulu Hotel in Oahu. The 187-room hotel will be alongside 113 Hotel-condominium units Renaissance Residences.
- The hotel will be part of a $500 million development of twin-tower hotels and condominiums that workers are building at Sky Ala Moanaone of the few ongoing projects near an Ala Moana station, which is expected to open in 2031.
- Developers in Hawaii and elsewhere often find the most traction in tourist hotspots when they can help create new neighborhoods.
- These projects showcase “sustainable urban living”, with a mix of residences, retail, offices, coworking and travel accommodations.
Mixed-use model unlocks building hotels worldwide.
- On April 20, Indian hotel company (IHC) said it would build a luxury hotel in Chennai as part of a larger mixed-use development.
- The greenfield project will include a 235-key hotel alongside 123 residences managed by an as-yet-unknown brand. AMPA Group will help build both sides. Branded residences will have access to the facilities of the Taj hotel, such as its swimming pool.
Of course, developers are always looking for discounted assets that have the potential to generate higher income after a capital investment. Here is an example from New York:
- RCMinvestor and hotel owner-operator, said on April 20 that he joined the banker Island capital buy it Sheraton New York Times Square Hotela 1,780-room establishment.
- The deal has a purchase price of $373 million, which equates to $210,000 per room. MCR said the deal was “one of the lowest prices per room paid for single-rate hotel real estate in Manhattan in the last 13 years.”
- Island Capital and MCR, which will manage the property, plan to invest more than $100 million in the hotel’s guest rooms, banquet halls and lobbies. They signed a long-term franchise agreement with Marriott International’s Sheraton brand.
These are all minor developments compared to Asia-Pacific.
- Radisson Hotel Group announced on April 21 its intention to add 150 hotels in Asia-Pacific this year. The move is part of a strategy to double its properties to 3,200 hotels over five years.
- hilton said last week that it plans to grow its presence in greater China from nearly 20,000 rooms to 270,000.
- Accor announced last week its intention to open more than 1,300 Jo&Joe hotels, or approximately 100,000 guest rooms, in China.
But when it comes to established tourism markets, developer creativity is a trend to watch.