COVER STORY, MAY 2009

FINDING SPACES FOR AN OASIS
New hotel projects find necessary niche in unhospitable market.
Amy Bigley

Although the hospitality sector has seen its fair share of trouble and foreclosures in this economy, flexible developers can continue to see success with hotel projects throughout the West. Owners and developers can overcome the challenges by downscaling properties, adjusting to new travel trends and continuing to offer exceptional properties and amenities at affordable prices.

Hotel Indigo San Diego Gaslamp Quarter

Hotel Indigo in San Diego

Nestled in San Diego’s historic Gaslamp Quarter, Hotel Indigo San Diego Gaslamp Quarter is InterContinental Hotels Group’s second Hotel Indigo property in California.

“Hotel Indigo San Diego is a testament to the brand’s strength and delivers against our strategy to grow in key, upscale markets,” says Janis Cannon, vice president, Global Brand Management, Hotel Indigo, InterContintental Hotels Group (IHG).

Slated to come online in August, the 12-floor property will feature a mix of 135 king-size rooms, 7-double-size rooms and 5 suites; 1,900 square feet of meeting space; 4,300 square feet of function space; and 4,700 square feet of outdoor terrace space with a 350-square-foot terrace hospitality suite. The hotel is situated within walking distance to restaurants, cultural activities and entertainment, including Petco Park, home to the San Diego Padres. Additional hotel amenities include the ninth-floor outdoor/rooftop Phi Terrace; a meditation deck; a fitness studio with cardio equipment and free weights; and Phi Bistro and Bar, an on-site casual gourmet restaurant.

The hotel features the brand’s Interpret Indigo design platform, which is inspired by each hotel’s environmental and cultural surroundings. Hotel Indigo San Diego will feature a 40-foot glass mural that mimics the ripples of the Pacific Ocean, and artwork of California poppies and surfboards in hues of warm yellow and Pacific blue, notes Cannon. The hotel also has a Seasonal Renewal Program that refreshes the hotel’s public spaces, menu items and wine pairings, music, artworks and murals, as well as guestrooms, to reflect the current season.

IHG’s unofficial “stimulus package” — appealing to guests’ mind, body and spirit — is not without a renewed focus on the bottom line. IHG is overcoming the current economic market and supporting its owners by streamlining its focus on four priorities (i) driving revenue, (ii) reducing costs, (iii) Holiday Inn relaunch and (iv) building scale. To improve revenue the company launched a new Friends and Family Program, which engages the company’s more than 330,000 associates as a sales force; additionally, the company is increasing activity with Priority Club Rewards, which currently has 42 million members worldwide. By reducing capital expenditure and pausing the share buyback program, “central and regional costs in 2009 will come in $30 million less than 2008 levels,” explains Cannon. The Green Engage program is also helping the company reduce costs by saving hotel owners up to 25 percent on energy costs.

IHG’s key weapon to weathering the economic storm is building scale, notes Cannon. “Our system, which includes our web sites, call centers and loyalty program, delivers almost 60 percent of room nights into our owners’ hotels.”

The St. Regis Deer Crest Resort

Ski Beach at The St. Regis

As the first five-star luxury branded hotel in Utah, St. Regis Deer Crest Resort is generating national and international excitement. Located at Deer Valley Resort in Park City, the $300 million resort property will feature 181 guestrooms, 67 condominium suites and 29 residences. The 450,000-square-foot project is slated for completion this fall.

The project met many challenges and changed developers three times before DDRM LLC came onboard.

“DDRM was able to change this dynamic by partnering with the St. Regis to create a resort with unrivaled amenities,” says Stan Castleton, CEO and founder of DDRM LLC.

St. Regis Deer Crest Resort brings much to Deer Valley in terms of visitor amenities and services. It is a true ski-in/ski-out lodge and offers the first funicular in a North American ski resort. Additionally, 55 percent of the property is dedicated to amenities such as Ski Beach, Remède Spa, Jean-Georges Vongerichten restaurant and 7,000 square feet of meeting space.

The grand lobby at The St. Regis Deer Crest Resort

With the challenging economic landscape, DDRM relied on its decades of experience with new and distressed real estate projects, which proved invaluable for the development of St. Regis Deer Crest Resort.

“The St. Regis Deer Crest Resort is financially healthy as a result of our background and reputation, in spite of the less than robust market,” explains Castleton. “The success of the project is due to its stellar slope-side location, its world class amenities…and its location that is just 40 minutes from Salt Lake City International Airport.”

Although DDRM has had to reduce staff – like most companies – it is focused on staying up-to-date on travel trends, which are also being shaped by the economy. “[The company] will continue to develop properties that speak to the needs of what makes travelers vacation today,” notes Castleton.

Cambria Suites

Armstrong Development Partners Inc. has joined forces with HP Properties and John Lopez of Lopez Foods Inc. to develop Cambria Suites at Portico Place in Chandler, Arizona.

The hotel opportunity was a joint effort to introduce a hospitality component that would be synergistic with the other retail and office components, explains Martin Hedstrom, real estate manager at Tempe, Arizona-based Armstrong Development Properties Inc. The first phase of Portico Place, a redevelopment project located at the intersection of Chandler Boulevard and Dobson Road, was recently completed. The project features retail space, including CVS/pharmacy and Dunkin’ Donuts, and 40,000 square feet of office space.

The five-story 92,000-square-foot hotel will offer 137 rooms and on-site amenities for guests, including restaurants and a CVS/pharmacy. The property will also feature easy access to adjacent businesses and facilities. With an immediate trade market including a major technology and health employments area, the hotel’s location is a logical choice for business travelers.

Cambria Suites’ developers went the extra mile and over a few additional hurdles so that hotel guests won’t have to.

“Cambria needed a variance to incorporate an additional story to the hotel, and fortunately the Cambria prototype had many of the same characteristics of Portico Place and was able to work with the city to utilize common ground for which the fifth story was granted. Efforts between city and developer are key,” says Hedstrom.

Construction should begin in third quarter 2009 with completion slated for first or second quarter 2010.

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