May 22–The downtown St. Louis hotel market is headed upscale.

Closed is the Millennium, the cylindrical riverfront hotel that shut down in January 2014 after taking most of its 780 rooms out of service nearly a year earlier.

Opened in August 2014 is the Magnolia Hotel, a $15 million remake of the Mayfair, which was shabby until taken over by Stout Street Hospitality, of Denver.

Loss of the Millennium, where rooms could be had for less than $100 a night, reduced downtown's overall room count to 6,960, said industry analyst Gary Andreas. In place of those rooms, downtown could gain by the end of 2017 about 350 classy new rooms at boutique rates more than double the Millennium's.

Andreas, who is based in Chesterfield, said the proliferation of boutique hotels is coming to downtown St. Louis about a year after the trend reached Kansas City and Indianapolis. 21c, the boutique brand founded in Louisville, Ky., in 2006, has a contemporary art museum in each of its five hotels. The sixth 21c is set to open this summer in a redone Ford Model T plant in Oklahoma City.

The Magnolia added no rooms to downtown St. Louis but has the distinction as its first luxury boutique hotel. Joining the Magnolia could be three more examples that typically emphasize high-end furnishings, attention to personal service and rates steeper than big chains such as Hilton and Marriott.

Boutiques planned in downtown St. Louis are:

–A $47 million project of 130 hotel rooms plus two floors of apartments in the Union Trust building at 705 Olive Street. The 14-story building, nearly empty now, opened in 1893 and was designed by famed Chicago architect Louis Sullivan, who led the adoption of steel-frame construction in the design of tall buildings.

St. Louis developers and spouses Amy and Amrit Gill hope to begin work on the project this year. If it proceeds as they hope, hotel guests and apartment residents could sip cocktails at a new rooftop bar in late summer 2017.

Through their Restoration St. Louis, the Gills are longtime developers who focus on renovations of old buildings. They have many projects in the St. Louis area and, in 2011, completed the $46 million restoration and renovation of the Hotel Blackhawk in Davenport, Iowa.

–Conversion of the longtime home of International Shoe Co., at 1501 Washington Avenue, as a 140-room hotel. Fe Equus Development, of Milwaukee, bought the building in February and is in the midst of designing the $47 million project. Tim Dixon, the company's owner, has said he plans a nonchain hotel on Washington Avenue.

Among Fe Equus projects is the 100-room Iron Horse Hotel in an old warehouse in downtown Milwaukee. Dixon said his hotels are "foodcentric," adding that his St. Louis hotel would offer food and drink on the main floor.

He said downtown's strong residential market factored in his decision for a hotel in the loft district. The 10-story building opened in about 1905 was International Shoe's headquarters, where playwright Tennessee Williams' father worked as a manager in the 1930s. The building has been empty since a charter school left in 2014.

–As many as 80 hotel rooms in the vacant LaSalle Building, at 501 Olive. ViaNova Development, of Chattanooga, Tenn., recently bought the 13-story LaSalle and the adjoining three-story building formerly occupied by Paradowski Creative.

Neil Kapadia, principal of ViaNova, said he hopes to open the hotel, which he has yet to name, in late 2017. He said the LaSalle's location near office buildings, the Arch and Busch Stadium will draw business and leisure travelers.

Kapadia said St. Louis is a "top-notch" city able to support several boutique hotels downtown. His project, expected to cost $10 million to $11 million, is under design by Trivers Associates, an architecture firm based in St. Louis.

The developers of all three boutique hotels anticipate use of federal historic preservation tax credits to help finance their projects.

Unclear is whether a hotel may be put in the Railway Exchange building, the vacant 21-story behemoth in the middle of downtown. The 1.2 million-square-foot building is under contract to Hudson Holdings, of Delray Beach, Fla. Company officials have declined to specify their plans but sources have said a redevelopment would have residences, stores and a hotel.

Andreas said one redevelopment possibility considered for the Railway Exchange was a hotel or condominiums on the upper floors.

ENHANCING DOWNTOWN

Leigh Hitz, president of six-hotel Magnolia brand, said downtown St. Louis is loaded with "beautiful old historic buildings." But she said newcomers to the boutique category should examine what is being done to enhance the area for business, leisure and convention travelers.

Hitz said some Magnolia guests have commented that downtown streets are poorly lit at night and that "everything closes up at 5 o'clock." Security also is a concern, she said.

Booking more America's Center conventions that last several days would help downtown hotels, Hitz added. She wants more higher-end conferences and trade shows to complement the SMERFs — convention business lingo for social, military, educational, religious and fraternal group get-togethers — that comprise much of downtown's existing convention business.

Hitz said downtown is doing well with new housing and restaurants, which should lead to more retailing.

"All of that needs to continue," she said. "I think we really want to move the redevelopment of downtown."

Maggie Crane, spokeswoman for Mayor Francis Slay, said all big cities have crime issues, adding that a lack of security in downtown St. Louis is more perception than reality. She said the police presence is growing.

Missy Kelley, president and chief executive of the downtown booster and development agency Downtown STL, said that coming are 3,000 replacement streetlights. The LED lights, scheduled to begin going up this fall, will brighten streets and sidewalks, she said.

Final costs of the new lights have yet to be determined, but Downtown STL, which is doing the project with the city, has raised $250,000, Kelley said.

A factor behind the current burst of hotel development is the low cost of borrowing. Another is the travel rebound largely as a result of lower gas prices. STR Global, a hotel data company, reported that 161,014 hotel rooms were under construction in April in the United States, up 28.3 percent from last year.

Andreas said that an encouraging sign for St. Louis is that out-of-town developers are behind two of the new local projects.

"It says people on the outside think there's a chance of making it work," he said.

The Gills, who focus on residential and small commercial projects, jumped into the lodging business by renovating the Hotel Blackhawk. That project, completed in 2011, is the model for what the Gills plan in St. Louis.

Andreas said the Davenport project is a success.

"It played well there, and it should play well here," he said.

Tim Bryant –314-340-8206

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