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The 450 room Charleston Place Hotel Marks the Epicenter Charleston's Economy;
Orient-Express Hotels Ltd. Bought a 20% Stake and
 Took Over Management in 1995
By Kyle Stock, The Post and Courier, Charleston, S.C.McClatchy-Tribune Business News

Aug. 28, 2006 - Twenty years ago this Sunday, Charleston Place threw open its doors to the public, letting in a flood of visitors, triggering a tide of commercial development and forever altering the landscape of the peninsula.

At the time, Charleston Mayor Joe Riley sported dark hair and was a "young and aggressive" city leader, according to a report in the New York Times. City unemployment hovered around 15 percent. And to Lowcountry residents, Hugo was just the last name of the Frenchman who wrote "Les Miserables."

Today, the 450-room hotel, meeting and shopping complex meets a 550-worker payroll, welcomes 17,000 guests in an average month and puts about $5.5 million a year in city, county and state tax coffers. The fountain that sits at the Market Street entrance of the property marks the epicenter of a local economy that counts tourism as its No. 1 industry.

Two decades later, it's hard to imagine the peninsula without the massive brick structure buzzing with traveling businessmen and bellhops, locals out for a swanky meal and little kids peddling roses they twisted out of palm fronds. It's equally difficult to recall King Street of the late 1970s and early 1980s.

It was the age that ushered and embraced the enclosed suburban mall, and local retail dollars were flocking to new big-box complexes in North Charleston and West Ashley.

Downtown, for years the area's primary canal of commerce, was drying up. Empty storefronts were common and pedestrian traffic was scarce. Property values on some sections of King Street fell to pre-1948 levels.

"Downtown Charleston, in many ways, epitomizes the decaying American city," an Atlanta magazine intoned in 1979.

Croghan's Jewel Box, which has been at 308 King St. since 1919, was lucky enough to have a city parking lot behind its property. When the hotel project was proposed, it had more business coming in the back door than the front, said Mariana Hay, who now owns the store that her family opened almost a century ago.

"We were dying," Hay said. "It was just a big blight. Downtown was really kind of a no-man's land."

Riley likened the area to a poisoned ecosystem. And in his first few months in office, he set out to find a cure, poring through books on city planning and commissioning an economic-development study from a Washington, D.C., consulting firm.

The company called for a major hotel on the site where Charleston Place now sits and the newly elected mayor embraced the suggestion, not realizing it would be nine years before ground was broken.

Riley and his supporters spent that time ducking from the salvos of political snipers, hurdling legal challenges, enlisting high-profile developers and massing heaps of capital.

"It was a difficult battle, but I just knew we were doing the right thing," Riley said last week. "There were lots of critical moments and times when I knew that if we caved or were timid about it, that it could fail, but I was determined to go on. In this instance, the more you worked on it, the more certain you were."

Bill McIntosh, who has owned a downtown travel agency since 1964, was in the thick of the debate as president of the Preservation Society of Charleston, which filed several lawsuits to block the project.

"It really divided Charleston down the middle," McIntosh recalled last week. "People did not speak to each other for years."

In the midst of the vitriol, the project was dubbed "Riley's Folly," and the lead investor threatened to sell the parcel to a low-budget motel company.

By the time Charleston Place opened as an Omni Hotel on Sept. 2, 1986, the city had parted with more than $100,000 in legal fees. The developers had plunked down $86 million, including a $10 million federal grant that the city secured and loaned to the project.

The project had a similarly inauspicious commercial start. A man posing as a valet stole two luxury cars from guests in the first year, and rainwater seeped between the building's brick exterior and its interior walls. The drawn-out repair job cost another $15 million and closed down large blocks of rooms for months on end.

But by that time, what started as a trickle of new development was about to flood the length of King and Market streets. In 1987, the Preservation Society granted the property a Carolopolis Award, effectively burying the hatchet with Riley and other hotel proponents.

Frank Norvell, a commercial real estate broker who was with The Beach Co. at that time, recognized the profound shift when banks started locating their local headquarters on Meeting Street, rather than Broad Street.

Norvell did his bit to transform the area further as part of a team that lured a Saks Fifth Avenue department store to King Street in 1996, a major coup for a city with less than 100,000 residents. It was the impressive retail sales at Charleston Place shops that made the difference with Saks executives, Norvell said.

"I hate to use the cliche that the hotel put Charleston on the map, but it's certainly accurate," he said. "It's not an exaggeration at all."

While interest from big-name national retailers pushed out a number oflocal businesses, many of those who owned their properties thrived, along with those who were able to shoulder the fast-rising rents.

Croghan's Jewel Box, which owns its building, does not have to bother with the back door much anymore, thanks to a steady stream of guests from Charleston Place and other hotels that have followed its lead.

"I can't even tell you what it does for our business," Hay said. "And it could have been an eyesore. It could have been a motel."

The past decade at Charleston Place has been marked by the tenure of Orient-Express Hotels Ltd., which bought a 20 percent stake in the business and took over management of the property in 1995.

The Bermuda-based company has renovated the rooms a few times over, and bought the dormant Riviera Theatre directly across from its King Street entrance in 1996, resurrecting a historic art-deco property and adding a unique meeting venue to its conference offerings.

Orient-Express recruited Bob Waggoner as executive chef in 1997, a hire that helped the Charleston Grill restaurant become the first eatery in the state to garner a four-star rating from Mobil Travel Guide.

The hotel also launched Charleston Place Events, which adds an extra revenue stream by producing off-site gatherings, according to Dean P. Andrews, former managing director at the downtown hotel and director of U.S. operations for Orient-Express.

The property now has 17 people on its payroll selling rooms and services to business groups and meeting planners, and the property is promoted by Orient-Express worldwide. Many of its guests would not have been in Charleston otherwise, Andrews said.

"You can't point to many urban redevelopment stories in the U.S. that have been successful," he said. "It all just came together in a way that was like magic."

That success, however, has come with a cost. The hotel has never posted a profit, according to Paul Stracey, general manager, although Orient-Express collects millions of dollars in management fees. And it has yet to pay back any of its $10 million city loan, which has now accrued to $20.5 million.

And some still question whether the large-scale development made the best use of the property, contending that more tourists would have come anyway and that the downtown economy was poised to rebound with or without the marquee hotel, thanks to the growth of the College of Charleston.

McIntosh, for one, thinks a smaller, multistage project might have been a better choice.

"It's not the Charleston in which I grew up," McIntosh said. "Everything is so spiffy now. It's kind of like Charleston sold it's soul for money. I don't mean that to sound harsh, but it's true."

The city is not done changing, and neither is Charleston Place. Orient-Express plans to renovate the Charleston Grill this winter, according to Andrews, and may buy a small inn on the peninsula to add to its stable of upscale properties.

As the Orient-Express empire approaches 50 properties, Andrews expects its well-heeled travelers from all over the world to discover Charleston through the company's catalogs.

An influx of international visitors would be the most recent dividend paid by the 20-year-old investment.

As Riley told The Wall Street Journal in 1980: "Even in a city like Charleston, there has to be room for something new."

BY THE NUMBERS

--$339: cheapest rate for a room Sat., Sept. 2

--450 rooms

--550 workers

--17,000 guests in an average month

--$5.5 million: taxes paid last year

--$86 million: cost to build in 1986 dollars

Source: Orient-Express Hotels Ltd.

MORE THAN A HOTEL

Charleston Place will mark the 20th anniversary of its opening Saturday, but the drawn-out history of the once-controversial centerpiece of the downtown tourist trade is pushing 30 years.

1975: Joe Riley is elected mayor on a platform of reviving downtown Charleston's flagging business district. He becomes the driving political force behind Charleston Place.

1977: City Council approves a $12,500 feasibility study for a hotel and convention center - originally dubbed Charleston Center by developer Holywell Corp. -on a large lot at King, Market, Meeting and Hasell streets. Conceptual plans show a 14-story complex, which drew fierce opposition from neighborhood groups, preservationists and others. Estimated cost: $37 million to $40 million.

1978: The first of several lawsuits were filed challenging the city's plan for the hotel.

1980: An appeals court ruled against the project's opponents, effectively ending legal challenges to the project.

1981: The cost of the project soars to $60 million. Demolition work begins two days ahead of the June 1 deadline. "A great day for our city," Riley said.

1983: Holywell drops a bombshell, saying it cannot obtain its construction loan. The city brings in Baltimore developers David Cordish and Robert Embry, who in turn recruit Michigan-based shopping center magnate Alfred Taubman to invest in the project. The cost increases to $70 million. The proposed building is downsized to its current scale, a move hailed by preservationists.

1984: The 450-room development is renamed Charleston Place. The city obtains a $10 million federal grant and loans the money to the project. It has yet to be repaid.

1985: Construction begins nearly four years after the demolition work.

1986: Partly finished, Charleston Place opens Sept. 2 with Omni Hotels managing the lodging and numerous big-name retailers such as Banana Republic opening in the shops weeks later. Local residents refer to the place as the Omni.

1995: The owner of the famed Orient Express Hotels chain buys 20 percent of Charleston Place and takes over management of the property. The Omni name is dropped. The new investors vow to transform the property into a five-star, five-diamond property, but that has not yet happened.

1996: Charleston Place buys the long-shuttered Riviera Theatre from the city for $1.2 million. It spends about $3 million to convert the art-deco property into a conference center.

1997: Chef Bob Waggoner is recruited from Nashville's Wild Boar to take over the famed Louis's Charleston Grill restaurant space. Waggoner names his acclaimed eatery Charleston Grill.

1998: The hotel opens a spa with four treatment rooms, which eventually is expanded to 11 rooms. Charleston Grill becomes the first restaurant in the state to win four stars from Mobil Travel Guide.

1999: A refurbishment includes the addition of a porte-cochere, fountain and bronze sculpture at the hotel's main entrance, as well as a rooftop tennis facility.

2006: Charleston Place marks its 20th anniversary.

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To see more of The Post and Courier, or to subscribe to the newspaper, go to http://www.charleston.net.

Copyright (c) 2006, The Post and Courier, Charleston, S.C.

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