Office-To-Hotel Conversion Underscores Detroit?s Appetite For More Rooms

DETROIT? A trio of local developers are betting the best way to boost occupancy in the David Whitney Building here is to convert the mostly vacant downtown office tower into a new 301-room luxury hotel. In line with this gambit, the Whitney Hotel Group LLC is reportedly putting the finishing touches on a $35-million financing package in advance of renovation work that would have the facility open for business about a year from now. Burton Brothers General Contractors of Southfield are said to have been retained to convert the 19-story building into the Whitney Hotel, and word has it Promus Hotel Corp. is finalizing an agreement to manage the facility under the Doubletree banner. Sheldon Smith, CFO of the partnership that acquired the building this past April, added that Promus is also contributing (an undisclosed amount of) money to the Whitney Building?s renovation. Overlooking Grand Circus Park and convenient to the new baseball and football stadiums, the proposed hotel is expected to cater to corporate travelers, foreign executives and diplomats, entertainers and sports figures, with rates slated to run between $130 and $190 per night. As noted by Detroit Metro Convention & Visitors Bureau Executive VP/COO Michael O?Callaghan, the new Whitney property should be a welcome addition to a Central Business District hotel scene that has weathered what might most accurately be termed ?years of stagnation.? All told, reports indicate there will be at least a half-dozen hotels planned or under renovation. ?We are now seeing the results of a concentrated and multi-faceted effort to improve Detroit?s image,? O?Callaghan said. As such, he maintained the city is in the middle of putting on a new face, what with the addition of: a new baseball stadium for the Tigers as well as a new football stadium for the Lions downtown; a multi-million-dollar renovation of the Renaissance Center?s office, retail and Marriott Hotel components; and a voter-approved casino gambling referendum some two years ago that has spurred the recent opening of the MGM Grand Casino as well as the in-the-pipeline development of the Motor City and Greektown Casinos. This across-the-board enhancement and upgrading of the city?s infrastructure would necessarily support expectations of a continuation of visitor-level increases of the past few years. As O?Callaghan noted, Detroit?s low point came in 1992 – 1993 when citywide hotel occupancy levels languished below the 50% mark. Since then, the C&VB reported that visitor counts have cumulatively climbed 42%, visitor spending increased 24%, and hotel occupancy has surpassed the 70% level hand-in-hand with ADRs roughly double those of seven years ago.What these numbers can be expected to mean to Detroit city officials is a pressing need for additional hotel rooms. To this end, local as well as national market-watchers openly wonder whether an anticipated 5% rise in room supply will actually be sufficient to allay growing demand, or will it be just enough to effectively hamstring the city?s on-going economic turnaround. ?At this point, Detroit can support? and sustain? a considerable amount of new hotel development and redevelopment,? said Harry Klingeman, executive director of the Michigan Hotel/ Motel/Resort Association. ?Certainly, any upsurge in CBD rooms bodes well for the city and its convention facilities. Over the years, there simply hasn?t been enough hotel rooms in the CBD to allow full and frequent utilization of the Cobo Conference & Exhibition Center.? To some extent, this situation will be remedied when the Whitney project comes on-line next year, along with the upgrading of what was formerly a 220-room Days Inn. As for level of service that will be offered, while sources quoting the Whitney Hotel Group contend that new property would be ?the only luxury hotel in Detroit,? O?Callaghan explained that such a pronouncement may not necessarily be wholly accurate. Accordingly, he pointed out that The Atheneum and its