Developers Chasing Missing Middle In Buckhead Hotel Market
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Developers of Buckhead's newest hotels are going for what they believe is the market's missing middle: customers willing to shell out between $250 and $300 a night for a room.
Metro Atlanta's hotel industry has largely been focused on big convention hotels with massive amounts of conference space or smaller, select-service hotels, Regent Partners President Reid Freeman said.
“We've spent very little time in the white space that has developed over the last 10 years that is lifestyle hotels,” Freeman said. "It's not a hotel where people walk around with badges."
Freeman is on tap for Bisnow's Future of Buckhead event Oct. 24, where panelists will discuss the submarket's hotel, office and retail real estate dynamics.
Regent Partners, along with The Loudermilk Cos., expects to break ground in November on a $90M, 201-room hotel in the Buckhead Village district that will be operated by Thompson Hotels. The project is scheuled to open in 2021. Described as a boutique hotel, the new Thompson is set to include a lobby bar, a chef-driven restaurant and a rooftop pool.
The average daily room rate through August for all hotels in Metro Atlanta was $117/night, according to data provided by STR. During that same period, Atlanta's luxury hotels saw an average nightly room rate of $227, but in submarkets like Buckhead, nightly rates can exceed $350.
“So the white space occurs between that $350 and the $225 rate that is prevalent in all of the other hotels in Buckhead,” Freeman said. “There's $125 worth of white space that no one is capturing.”
Portman is underway with the redevelopment of a 1950s era condominium called the Sobu Flats into a Kimpton Hotels & Restaurants hotel with 216 units, just across East Paces Ferry Road from Regent's project. And Songy Highroads is planning to develop a $75M, 214-room Hyatt Centric boutique hotel on the property of Lenox Square mall, a hotel that is targeted to “millennial-minded travelers who want to be in the middle of the action,” Hyatt officials recently told the Atlanta Business Chronicle.
“The experiential factor is becoming more prominent. You have different segments of travelers, from millennials to people aging into retirement. They are looking for an experience and place that is a reflection of the surrounding community,” Songy Highroads CEO David Songy wrote in an email. “The response in many larger urban markets has been the opening of more lifestyle/boutique properties, rather than your cookie-cutter, Courtyard-type product.”
Portman also is aiming for that middle-market guest with prices between $225 and $250 a night, Development Associate Reid Scott said.
“There haven't been any newer, boutique-style properties that have opened up there,” Scott said. "We thought there would be an opportunity to position between the W [Atlanta] and The St. Regis [Atlanta]."