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Downtown Detroit's Hotel Market Rapidly Evolving; Sheraton Detroit
 Riverside Opens Following $35-million Makeover, Historic
 Pontchartrain Name Abandoned
By John Gallagher, Detroit Free PressMcClatchy-Tribune Regional News

Nov. 3, 2007 --Downtown Detroit's rapidly evolving hotel market has welcomed a new player.

This week, the former Hotel Pontchartrain unveiled its new identity as the Sheraton Detroit Riverside. Renovated top to bottom in a two-year, $35-million makeover, the Sheraton offers 367 rooms, including 61 suites.

The Sheraton joins the recently opened MGM Grand Detroit and the soon-to-open MotorCity Casino hotels in the downtown-area market. Still to come: The Westin Book Cadillac, undergoing a $180-million renovation, is to open Oct. 1, 2008, with the Ft. Shelby Doubletree Guest Suites and the Greektown Casino hotel to follow.

All together, the area's longtime inventory of about 2,000 hotel rooms is being roughly doubled by the new additions.

From a meeting planner's perspective, the new rooms make Detroit a much more attractive option for conventions and trade shows at Cobo Center, said Michael O'Callaghan, executive vice president of the Detroit Metro Convention & Visitors Bureau.

"You don't have to worry about busing people out to the suburbs and that sort of thing," he said. "I'm positive the greater the number of hotel rooms downtown has a positive impact."

Paul Gjerpen, manager of the Sheraton Detroit Riverside, said the owners, Shubh Hotels Detroit LLC, an investor group based in Boca Raton, Fla., thought it best to abandon the historic Pontchartrain name, which in recent years had been somewhat tarnished by the hotel's run-down condition.

"If we were going to start anew after the $35 million that we spent, we thought we'd start with a new name," Gjerpen said Friday during a tour of the hotel.

The Sheraton renovation included a new lobby, fitness center and pool, bar and restaurant, and all-new room decor. There is a new club lounge for guests on the 23rd and 24th floors, offering breakfasts, happy hour, complimentary local- and toll-free calls, and two 41-inch HD flat screen televisions.

A business/media center off the lobby offers Internet connections and a flat-screen television.

Gjerpen said a pedestrian bridge to nearby Cobo Center is planned for 2009. A seven-day-a-week Starbucks coffee shop is scheduled to open soon. Published room rates are $189 per night during the week and start at $129 per night on weekends.

In the past few years, occupancy at the hotel had dipped to around 25%, but Gjerpen said the upgrades plus the marketing power of the Sheraton brand and reservation system should bring back business.

"We think the name Sheraton going up on the hotel will be a major improvement for us, especially from the corporate business traveler," he said.

The rush of new hotels downtown is part of a broader revitalization that includes new loft residential housing, the redevelopment of Campus Martius Park and the Detroit RiverWalk, and a host of special events including Super Bowl XL and the baseball World Series in 2006.

Even so, the addition of so many new rooms at the same time has some hotel industry experts worried. The overall downtown market has enjoyed occupancy levels of no better than around 55% to 60% in recent years, roughly enough to break even, said Chuck Skelton, an Ann Arbor-based hotel consultant.

Doubling the number of rooms in a short time might push occupancy levels down, at least in the short term, he said.

"The whole key here is, do they create new business or do they just steal business from the other guys?" he asked.

But he added, "It's nice to have a Sheraton back in the market. It's nice to see Detroit getting new fresh hotels."

The new hotels are already having an impact. Even a year before it reopens next Oct. 1, the Westin Book Cadillac is sold out for the 2009 North American International Auto Show, mostly to "international luxury brands" personnel, said Scott Stinebaugh, director of sales and marketing.

Moreover, the number of conventions and shows booked downtown seems to be rising, O'Callaghan said. Those include first-time-in-Detroit conventions by the Union Label and Service Trades in 2008 and American Mensa in 2010.

"I think that we weren't able to attract some of the larger conventions to the city because we didn't have a sufficient room package. Now that we do, we are seeing some key groups taking a second look at Detroit," Stinebaugh said.

But he admitted it might take a while to settle the doubts.

"We all understand it's going to take 12 to 18 months to see what the market can absorb with all this new inventory," he said.

Contact JOHN GALLAGHER at 313-222-5173 or jgallagher@freepress.com.

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Copyright (c) 2007, Detroit Free Press

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