20 Years After Katrina, Hotels Define New Orleans. Everything Else Barely Registers

This is the second installment of Bisnow’s two-part project marking the 20th anniversary of Hurricane Katrina, examining how New Orleans’ commercial real estate market has — and hasn’t — rebuilt over the past two decades. Read Part 1 here.

Guests streamed past glittering chandeliers and century-old mosaics at the grand reopening of The Roosevelt hotel on July 1, 2009.

Just four years earlier, Hurricane Katrina had left the New Orleans landmark dark and gutted, with 10 feet of water filling its basement.

Dimension Development bought the shuttered property in 2007 for $17M and poured $145M into restoring its art deco glamour — reviving the famed Sazerac Bar and signaling that New Orleans hospitality was back in business.

“The Roosevelt, in my mind, is a positive example where investors are putting a lot of money with the idea of a big return,” Ben Johnson of the New Orleans Chamber of Commerce said at the time.

By 2015, The Roosevelt was appraised at $255M, up from its $17M market value eight years earlier. It’s still worth around $200M today — proof of how hotels became one of the safest bets in New Orleans’ post-Katrina revival.

The Roosevelt wasn’t the exception. It was the playbook. Billions poured into hotels, remaking New Orleans into a tourism powerhouse while its office market flatlined. That divide between a booming hospitality sector built on spectacle and a stagnant core that no longer drew major employers defines the city’s recovery.

Twenty years on from Hurricane Katrina, the city is a global stage but not a corporate hub, and its recovery has been shaped by pageantry and short-term returns, not the foundations of long-term prosperity.

Betting On Beds, Not Desks

In Katrina’s immediate aftermath, New Orleans looked like a city whose hospitality industry might never recover. About 70% of hotel rooms were shuttered, power outages dragged on for weeks, and the Army Corps of Engineers spent nearly two months pumping water out of the city. 

The New Orleans Saints decamped to Baton Rouge, and even the federal government’s General Services Administration fled to available office space throughout Louisiana and neighboring states. 

To counter the exodus, the city’s marketing agency launched a desperate campaign, “Soul is Waterproof,” urging conventions and tourists to come back. That “soul” — the cultural richness that made New Orleans a global draw — turned into a magnet for capital. 

Billions in federal aid and private investment flowed in, and leaders prioritized restoring the city as a stage for visitors and events.

Between 2005 and 2010, $1.8B poured into New Orleans hotels — more than double the $807M that went to office buildings, according to MSCI. 2007 alone saw $872M in hotel deals, including RREEF America and Loeb Partners Realty’s $93M purchase of the 693-key Astor Crowne Plaza. 

A steady wave followed: Clearview Hotel Capital and Starr Cos. bought the JW Marriott for $67.5M in 2008, while Blackstone paid $100M for a 25% stake in the Hilton Riverside in 2010.

“It’s a culmination of travelers looking for something more upscale and owners seeing they can appreciate their [average daily rate] by spending more to make a property more upscale,” said Lauren Hock, senior vice president with HVS New Orleans.

By contrast, office activity was limited to a few major players. The Haberman family bought Place St. Charles, a 1M SF tower, for $103M in 2008. AVR Realty picked up The Saulet apartments that same year for $97.5M.

Longtime owners like The Feil Organization and Hertz Investment Group doubled down, and the late Tom Benson, owner of the Saints, scooped up the storm-ravaged Dominion Tower and New Orleans Centre mall for $42M in 2009 — a bet that would eventually seed his family’s entertainment district.

“Katrina absolutely created that opportunity,” said Michael Siegel, president and director of office leasing for New Orleans-based Corporate Realty.

But by and large, office deals never delivered the outsized returns seen in hospitality.

'We Just Don't Have Enough Of A Corporate Base'

The city’s redemption narrative wasn’t just about bricks and mortar. 

Images of New Orleans underwater were followed by the Saints’ fairytale 2009 season, capped by the franchise’s first and only Super Bowl win.

“Tourism just took off right in the post-2009 period,” said Adam Lair, managing director of hospitality investments for Partners Capital. “And once tourism took off, the interest from all the more institutional, national hotel buyers just exploded.”

That momentum was reinforced by bold public spending. 

Less than two months after the storm, then-Gov. Kathleen Blanco pushed through a full restoration of the Caesars Superdome, even as much of the city remained displaced and basic services were scarce. The $225M project — $178M of it from the Federal Emergency Management Agency — was politically fraught but proved prescient. The Ernest N. Morial Convention Center soon followed with a $60M renovation, and both facilities have since surpassed pre-Katrina booking levels.

The Superdome, which had sheltered thousands and lost three-quarters of its roof, reopened on Sept. 25, 2006.

“One of the first and largest investments made after Katrina was in bringing back the Superdome,” said Jeff Hébert, CEO of HR&A Advisors and a former senior city official. “As a symbol to the nation … the city was coming back.”

Federal and state incentives multiplied the impact. Louisiana’s historic tax credit program spurred nearly $2.7B of commercial investment between 2007 and 2016. The new markets tax credit program, which had only brought $16.5M into the New Orleans-Metairie region before Katrina, jumped to $1.2B in the five years afterward, according to Walt Leger, CEO of New Orleans & Co.

While capital gushed into hotels and redevelopment projects, institutional investors continued their long retreat from the office market.

“We just don’t have enough of a corporate base,” Beau Box Commercial Real Estate partner Cres Gardner said. “Our rent rolls are not going to be of the quality that an institutional buyer is looking for.”

Instead, developers converted roughly 3M SF of outdated office stock into apartments, helped by the ability to stack federal and state historic tax credits. 

The Central Business District’s residential population jumped 28% between 2000 and 2010, and another 1,000 units were under construction or planned by 2016, according to the Downtown Development District.

“It’s been a huge, huge explosion in multifamily, condo development. … That’s where the action is,” Gardner said. “But from an office standpoint, we’re certainly the sleepiest component of it, unfortunately.”

Booms, Busts … And Benson 

With visitation soaring and limited new construction, New Orleans’ hotel market punched above its weight and became a hot real estate bet. 

Owners leaned into luxury, chasing higher room rates and high-end travelers. Hotel room stock remained just shy of pre-Katrina peaks in 2012 but grew another 14.3% from 2013 to 2025. Major corporate entities, with anxious stakeholders and a literal world of places to sink capital, choose to build in New Orleans, Leger said. That says a lot about the city’s tourism draw.

The Astor Crowne Plaza shows both the upside and volatility. RREEF and Loeb Partners bought the 693-key hotel for $93M in 2007, then poured $11M into renovations. The BP oil spill in 2010 hammered demand, pushing the asset into distress. Starwood Capital scooped it up in 2014 for $116M, a quick rebound in value. Today, though, it’s worth closer to $110M, according to hotel investor Len Wormser, dragged down by its leased-land status.

By contrast, Blackstone’s $100M investment in the Hilton Riverside paid off handsomely. Valued at $400M in 2010, it is now worth roughly $325M, even after Blackstone spun Hilton into Park Hotels & Resorts and pocketed $14B through Hilton’s initial public offering and exit.

The office market told a very different story. Investors like Hertz Investment Group pursued a scale play, eventually owning five of the city’s 15 Class-A towers. 

“They figured out how to operate here in a very efficient way, which you have to do in a lower-rent market like this,” Gardner said. 

But heavy reliance on CMBS debt left Hertz exposed. The firm lost the 39-story Energy Centre to foreclosure despite 90% occupancy and a $92.6M appraisal. Other holdings, including First Bank & Trust Tower, are now under court-ordered liquidation as the company scrambles to pay off $145M owed to Israeli bondholders.

Future pressure looms. Shell plans to vacate its 330K SF lease in the Hancock Whitney Center by 2026, relocating to the new River District. 

Gardner remains hopeful: “I've got a couple of really good buildings with a lot of positive momentum right now and some good things happening. So I think whoever ends up with [the buildings] … I think there's going to be some good opportunity here.”

Local capital has also stepped in. Benson Capital Partners, founded in 2019 by Saints and Pelicans owner Gayle Benson, has expanded aggressively. After buying the 1,100-room Hyatt Regency in 2019, the firm opened a Mercedes-Benz dealership in 2022 and announced plans this year to acquire 1515 Poydras, a 27-story tower downtown. 

“I remain steadfast in my commitment and belief in the future of our city,” Benson said in a news release. “It is important now, more than ever, to continue to invest in our community.”

'All Boats Rise' — Or Do They?

Hurricane Katrina remains the costliest U.S. hurricane of the century, with damages estimated at $320B. 

Nearly 20 years later, New Orleans also ranks as the American metro most exposed to future flooding. And yet the city’s recovery shows what happens when disaster aid, private capital and local leadership converge on a single bet: build back around hotels, tourism and spectacle.

That bet paid off in many ways. Tourist dollars became the fuel of the city’s economy, drawing in institutional investors and global brands. Between 2015 and 2019, even a fledgling tech sector piggybacked on the city’s new vibrancy — before the pandemic drove it out. 

“I was very bullish on that segment at that time and hopeful that we continue to grow that,” Gardner said. “But unfortunately, that’s remained pretty disrupted.”

Hospitality never wavered. The Four Seasons poured $450M into the World Trade Center, Virgin Hotels opened after six years of planning, and Caesars spent $435M to rebrand Harrah’s. Today, 26,000 hotel rooms cluster within 2 walkable miles downtown. 

The demand is there: Taylor Swift’s 2024 tour filled the Superdome with nearly 200,000 fans, and Super Bowl LIX drew another 100,000 visitors, producing $1.25B in economic output.

Tourism’s dominance shows up in the city’s finances. In 2008, hospitality generated about 35% of property tax collections. Today, it provides roughly half of all revenue that supports city operations, Leger said.

“The investments that continue to be made continue to put a lot of pressure on the tourism and travel industry to carry a lot of the burden here,” Leger said.

The focus on visitors has spilled into new projects like the River District, a mixed-use development anchored by Shell’s future headquarters. Alongside office and housing, its plans include entertainment, retail and public green space. 

“Their commitment to New Orleans and the River District should serve as a benchmark for other corporations considering expansion and growth in the Crescent City,” said Louis Lauricella, a co-managing member of the consortium.

Still, the Central Business District remains weak where it matters most. White-collar tenants never came in force.  

“The expansion of the hospitality industry doesn’t directly put people in office buildings, but all boats rise,” Corporate Realty’s Siegel said.