CLEVELAND—Following a dearth of new-construction activity and limited investor interest for the better part of a decade, the city of Cleveland is undergoing something of a renaissance when it comes to hotel development.
Within the past couple of years, a bevy of new projects—ranging from repositionings to new-builds—have come to fruition, and still more have entered the city’s pipeline of product. After having added nearly 1,000 hotel rooms in 2014, Cleveland has some six hotels—four of which are downtown— and nearly 1,500 rooms in various stages of development and set to open in the next two years.
Those properties include the Kimpton Cleveland Downtown, Hilton Cleveland Downtown, Le Méridien Cleveland, Drury Plaza Hotel, the Residence Inn in Avon and the Hyatt Place in Westlake.
One of the city’s recent additions is The Westin Cleveland Downtown, which was converted from a Crowne Plaza and opened last spring. The 484-room hotel is adjacent to the convention center, which opened in June of 2013 and will play host to the Republican National Convention in 2016.
Ken Geist, EVP, Sage Hospitality, which developed and manages the property, talked about why the company was bullish on the market. “We saw Cleveland as an emerging market when we started the project. The county had just approved the new convention center; the city was actively engaged with developers to bring new investment to the downtown area; and there hadn’t been any new hotel product built for many years,” said Geist.
He touted the results of the conversion following a $74-million property-wide renovation. “The old Crowne Plaza had been neglected and was in very poor condition. With a significant renovation of the entire building, we were able to create something very new and exciting in the Cleveland market,” he said.
Meanwhile, Kimpton Hotels & Restaurants is well underway on the $50-million development of the 122-room Kimpton Cleveland Downtown, which is scheduled to open later this year. The project is an adaptive reuse of the 1901 Schofield Building, which has been vacant for years.
“Cleveland is well known for its historical landmarks and buildings that date back to the city’s heyday in the late 19th and early 20th centuries. Until recently, many of these structures sat empty for more than a decade, but they are now shaping the city into a vibrant destination for travelers and tourists,” said Mike DeFrino, CEO, Kimpton Hotels & Restaurants.
DeFrino elaborated on the resurgence of the Cleveland market. “In the past three years, Cleveland has seen an uptick in investments toward new leisure projects that are attracting and helping to breathe new life to the travel and tourism industry in Cleveland,” he said.
DeFrino also talked specifically about the hotel’s location and the opportunity present. “Cleveland’s downtown business district is ripe for a unique boutique hotel, particularly one that showcases such an iconic, historic property as the renowned Schofield Building. Established attractions like the Horseshoe Cleveland, the Greater Cleveland Aquarium, the Global Center for Health Innovation and the Rock and Roll Hall of Fame give the city more prominence, with plans for continued expansion helping to promote a positive outlook from the local lodging industry and prospective hotel developers,” he said.
The Cambria Hotel & Suites Cleveland Avon, which opened late last year, was a ground-up, 133-room hotel developed by Choice Hotels and Ceres Enterprises, LLC. Katie Boeckman, director of sales, Cambria Hotel & Suites Cleveland Avon, also touted the development of the area. “There is an influx of hotels being built in the Avon/Westlake/Sheffield Lake area, along with several hotels under construction in downtown Cleveland,” she said.
The 600-room Hilton Cleveland Downtown is under construction and slated to open in July of 2016. The 32-story, $272-million project will connect to the new convention center via an underground walkway. In addition, the 180-room Drury Plaza Hotel is under development and slated to open in 2016, and is adjacent to the convention center. The six-story building, which formerly housed the Cleveland Metropolitan School District, was constructed in 1930.
Notable openings within the past year include the 100-room Hotel Indigo Beachwood, which debuted last June. In addition, the 153-room Courtyard by Marriott in University Circle opened last March and the 150-room Aloft Hotel Downtown was redeveloped for $20 million.
According to Smith Travel Research, the city’s supply grew 2.7% in 2014, while demand increased by 1.9%. In contrast, supply actually declined 0.1% in 2013 as demand ticked up slightly at 0.9%.
But, similar to many other metropolitan markets, performance has been trending up for the past few years. The city’s occupancy for the year came in at 61.2%, actually declining slightly from 2013, when it was 61.7%. However, more importantly, ADR for the year was $98.40, up 4.6% from $94.09 in 2013. Meanwhile, RevPAR jumped to $60.27 in 2014, a 3.8% increase from $58.08 in 2013. HB