Moving on up: New hotel construction projects on the grow
A handful of new hotel projects in the region have obtained financing and are moving ahead, while a number of hotels have begun construction and look to open before year’s end.
The Hyatt Place Detroit Novi at the Suburban Collection Showplace and the Aloft Detroit, planned for the historic David Whitney Building, are filling niches by bringing hotel rooms to the expo center for the first time and a boutique hotel to downtown Detroit.
Hyatt Place is expected to open late this spring. When completed, the $10 million to $12 million, six-story hotel — attached to the east side of the expo center — will have 126 rooms.
The new construction also will add 25,000 square feet of meeting space, bringing that total to 80,000 square feet. Also on site will be a new ride-and-drive lot geared toward auto research, dealer training and vehicle launches.
“We had site plan approval in 2007-08 … but tabled that after the economy fell,” said Blair Bowman, owner of the Hyatt Place and Suburban Collection Showplace.
Bowman said he moved forward with the new hotel after securing a tax abatement from the city of Novi for about 50 percent of the real estate taxes on the hotel for six years and after getting other needed approvals and favorable construction pricing — signs the economy was improving.
Numerous events, associations and convention producers had expressed interest in booking the showplace if a hotel were available, he said. And they’re doing so, scheduling events into October and November.
Developers of the upscale Aloft Detroit hotel are wrapping up financing, said Mike Damitio, senior vice president of acquisitions for Farmington Hills-based hotel investment firm Trans Inns Management Inc. They expect to begin the $82 million historic restoration during the first quarter.
Aloft is a division of White Plains, N.Y.-based Starwood Hotels & Resorts Worldwide Inc.
Trans Inns is developing the Detroit building in a joint venture — Whitney Partners LLC — with The Roxbury Group, a Detroit-based development firm.
The Aloft will have 136 rooms on the lower floors of the 19-story building, while the upper floors will house 108 apartments. The Roxbury Group will oversee development of a 108-unit residential component as well as retail development on the ground floor. Trans Inns will operate the hotel and serve as property manager.
The hotel is expected to open during the second quarter of 2014, Damitio said. The project will retain the building’s 100-year-old fixtures, Italian marble floors, terra-cotta cladding on the atrium walls and gold leaf molding, while modernizing the heating and cooling and plumbing systems and bringing in modern furnishings and opening a restaurant on the first floor.
Trans Inns and Roxbury have been pulling together financing for two years, Damitio said. The process been complicated, he said, but historic tax credits are helping.
“Development is tough in any market today, but we do feel like we’re satisfying a niche for downtown,” he said.
Demand for residential downtown has been strong, Damitio said.
“And this is a hotel that hasn’t existed in Detroit or in the state,” he said. “It’s a historic project with a very modern look and feel.”
A $7 million, 100-room Hampton Inn & Suites that was tabled when the economy crashed is back on track in Ann Arbor and poised to capitalize on rising demand in Washtenaw County. Construction on the hotel, which will be on Jackson Road near the Clarion Hotel and Conference Center, is expected to resume this spring.
Akram Namou, majority shareholder of the Clarion and president of A&M Hospitality, said he and son Shawn Namou recently secured about 60 percent of the financing from the U.S. Small Business Administration. The remaining financing is coming from shareholder investments, Akram Namou said.
The Clarion and Hampton Inn will refer business to each other, he said, with his son holding the majority share of the new hotel. Plans call for opening the Hampton Inn during the first quarter next year.
The new hotel will follow the opening late last year of the TownePlace Suites by Marriott and the Hilton Garden Inn three miles south of downtown Ann Arbor. The two hotels added 227 rooms to the market, which already offered 3,484 rooms across 30 properties.
Rochester Hills-based Amerilodge Group LLC, a 5-year-old company that owns and operates seven other Michigan hotels and four total in Ohio and Indiana, has plans to open three hotels in metro Detroit between 2013 and 2014.
In October, Amerilodge launched construction of a $9 million Holiday Inn Express Hotel & Suites in Troy on Stephenson Highway. The 117-room hotel should open the second week of April, said Amerilodge President and CEO Asad Malik, who left his position as CFO of Henry Ford West Bloomfield Hospital last August to manage his company full time.
This month, Amerilodge plans to break ground on another Holiday Inn Express in Rochester Hills. The $6.4 million hotel will have 83 rooms and should open in November, Malik said.
Also on tap this year: construction of the $7 million Chesterfield Fairfield Inn & Suites. The 80-room hotel in Chesterfield Township is set to open in May 2014.
Besides the three new hotels planned for Southeast Michigan, Amerilodge has four additional hotels in the works for Monroe, Port Huron, Bay City and Battle Creek, all set to open by late spring 2014, Malik said. It’s spending a total of $52 million across the state.
“We have used our current relationships with our existing banks, and … we’ve developed new relationships with new banks like Wells Fargo, which is financing our Troy project, and Lake Trust Credit Union, which is financing the Rochester Hills hotel.”
Amerilodge’s revenue rose 11 percent to $19.3 million last year, Malik said.
Average daily occupancy at its Michigan hotels was 70.1 percent last year, and the revenue per available room across those hotels rose 7.3 percent from 2011 to 2012, he said.
“We’ve definitely seen the (financing) loosen up,” Malik said, adding that the state’s improving economy and double-digit occupancy growth across Amerilodge’s Michigan hotels last year helped.