May 28–Though travel to Baltimore declined last summer after the April riots, hotelier Khaled Said, who was planning a $14 million conversion of a former culinary college building downtown into a 101-room hotel, was undeterred.
The 55-year-old has built his business working on hotels on Baltimore's outskirts, spots that might seem risky. But Said is hardly alone in his interest. Other hotel investors are moving forward with plans for new buildings, brands and renovations in and around downtown.
"The city is recovering and the growth is coming back," said Said, vice president of Commerce Hospitality Investment LLC, which is developing the hotel at 17 Commerce St.
A New York hotel magnate rebranded the Baltimore Harbor Hotel this month with the Radisson flag, after purchasing the property late last year. Marriott is working with the Tran Group to open a 150-room Delta Hotel on Redwood Street by the end of the year.
In Mount Vernon, San Francisco-based Commune Hotels and Resorts is temporarily closing the former Peabody Court Wyndham on Cathedral Street for a major renovation, while the owner of the boutique Hotel Brexton on Park Avenue is working to win approval for a roughly $1 million expansion.
"This was an opportunistic project that presented itself and really fit well into what we're trying to accomplish for the Delta Hotels brand," said Greg Durrer, senior director global brand management for Delta Hotels, a Canadian flag that opened its first U.S. location this year. "There's a lot of growth in development in that local area surrounding the hotel and broadly across Baltimore, and we're excited to be part of that story."
As the summer tourism season starts, some signs support investor optimism.
The number of room nights booked in the Baltimore business district increased 5.4 percent this year through April compared with the same period in 2015, according to data from STR, a hospitality research firm. The 63.2 percent occupancy rate in that time is up 1.5 percent from last year — and higher than 2014 as well. That is stronger growth than for the Baltimore region as a whole and better than the U.S. average.
Nationally, the U.S. Travel Association has forecast a 2 percent increase in domestic leisure and business travel this year. Officials at Visit Baltimore, the city's convention and visitors bureau, said they expect a strong summer season.
Eight citywide conventions are booked over the next few months, the Orioles have had a strong start to the baseball season and teams with faithful fans — such as the Boston Red Sox and the New York Yankees — are in town on key weekends. There are also events planned connected to tall ship visits, the 40th anniversary of the African-American Festival and the 100th anniversary of the National Park Service.
"We're hoping that our tourism season will be better than 2014, and by all means 2015, and looking at the year-over-year data … is indicating that we're seeing a rebound," said Ron Melton, Visit Baltimore's interim president and CEO.
Hoteliers clearly are betting on the city. The growth in room supply in downtown Baltimore is on track to outpace such growth in the metro area and the country for a second year in a row. According to STR, the number of rooms available downtown increased 3.8 percent from 2015 through April, more than double the growth nationally and in the Baltimore region.
Last year, a 130-room Hotel RL opened on Redwood Street downtown, the 165-room Hotel Indigo opened on West Franklin Street in Mount Vernon and the luxury Ivy Hotel opened in Midtown-Belvedere with 18 rooms and suites.
Jan Freitag, senior vice president at STR, said the increase in supply reflects investor confidence in demand despite the city's unusual 4 percent decline in occupancy rates last year. And while the added rooms might limit rental appreciation, that is not necessarily a reason not to build, he said.
"You're selling on average seven out of 10 rooms almost every single night," he said, pointing to summer occupancy rates in previous years. "It says, 'Oh look, there seems to be an opportunity here.'"
Baltimore's relative affordability as an investment market also plays a role.
For Sam Chang, president of New York-based McSam Hotel Group, a combination of sentiment and a bargain price persuaded him to buy the former Sheraton City Center on West Fayette Street from an affiliate of the Blackstone Group late last year.
Chang knew Baltimore — when his car broke down en route to Los Angeles he decided to stay here and opened several restaurants before moving to New York City nearly 15 years later — and at a cost of about $15 million for two towers with more than 700 rooms, he said he figured, "Where can I go wrong with that?"
One 323-room tower at Chang's hotel started operating as the Radisson Hotel Baltimore-Inner Harbor this month, after nearly two years as an independent operation. Chang is weighing plans to reopen the second tower, which closed in 2013, as a different hotel or as apartments. He said he plans to invest about $10 million to renovate the Radisson and the second tower.
"Baltimore is not as strong a market as New York City," said Chang, 55, whose company owns about 30 hotels, mostly in New York. "It's still a good market."
The Hotel Brexton's proposed expansion, which would add a restaurant and meeting space and increase its room count to 38 from 29, is intended to help it compete when it comes to winning group business, such as weddings and family reunions, said Robert "Bob" Glock, the general manager. The plans need several approvals to proceed because the hotel is in a historic district.
"The city itself maybe has too many hotels," Glock said, but the latest additions signal growth potential for tourism, as neighborhood art and dining scenes expand and the city's reputation changes.
"What I am hopeful for is that each of the neighborhoods in the city is recognized further," he said. "It's an opportunity for us to become better known for the character of our neighborhoods, in addition to the charm of our harbor."
Said, who is involved with the Best Western Plus Hotel near the port in East Baltimore and the Holiday Inn Express along the Fallsway, said the city can handle the increase in hotel supply, especially as properties open in new locations and at different price points.
His new venture is a Staybridge Suites, designed to serve customers looking for extended stays, with opening planned in September or October.
"We're stretching the city," he said. "The more you clean up, you create business, you create confidence in the city, and it will encourage more people to come and build."
