Hotel Conversions- Trend or Isolated Cases?

Given the limited financing available for construction of full-service hotels, some companies are taking a less costly route and converting existing buildings, such as office buildings and department stores in urban settings, into hotels.

In New Orleans, the D.H. Holmes department store was converted into the Chateau Sonesta Hotel in early 1995. Kimpton Hotel & Restaurant Group, Inc. of San Francisco recently completed a conversion of a former downtown Portland department store into the 221-room Fifth Avenue Suites Hotel, and is now converting a downtown Seattle office building into the 189-room Hotel Monaco Seattle, slated for a summer 1997 opening. Hilton Hotels is planning to convert the Marina Towers, an office building in Chicago, into a 375-room franchise property, opening in September 1997. In urban areas, the lack of available land combined with the prohibitive costs of new construction make it more difficult to justify investment, says Robert Mandelbaum, director of research, PKF Consulting. With conversions, he says, there is not only up-front financial savings, but the conversion probably doesn't take as long as new construction.

Do these examples signify a new direction in the hotel market? "There is no strong trend in conversions," contends Chuck Ross, vice president, Smith Travel Research, Inc. "You may see isolated cases where the specific circumstances are supportive, but it is very expensive to convert an office building into a hotel."

The conversions probably won't put much of a dent in occupancies or rates. "The addition of the Marina Towers rooms won't drastically affect anybody," says Dave Scypinksi, director of meeting and convention marketing, Hilton Hotels Corporation. "In softer seasons, the conversions might have some effect, but in peak-no."

Doris Sklar, 60, died in an automobile crash on October 18 on Long Island, NY. Sklar worked for 36 years for the General Electric Management Development Institute in Ossining, NY, 24 of them in meeting planning, until February when she stepped out on her own to head Sklar Worldwide Meeting Management, Ltd., based in New York City.

"Doris was well known and highly respected both in the U.S. and abroad as a skilled, professional meeting planner and warm human being," said Virginia Lofft, vice president/publishing director of the Adams/Laux publications. "We will all miss her." Doris was working with Adams/Laux on the program for the first Beyond Borders conference to take place in New York City in March 1997. She was a member of the board of directors of the PCMA New York Chapter.

Among her numerous awards: the International Meeting Planner of the Year (Meeting Professionals International); Pacesetter Award (Hospitality Sales & Marketing Association International); and a Hall of Fame Award for distinguished achievement and exceptional professionalism (MPI Greater NY Chapter).

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