|By Keith Reed, The Boston Globe|
Knight Ridder/Tribune Business News
Nov. 6, 2004 - There isn't much choice for travelers looking for luxury accommodations in Boston, but that's about to change in a big way.
Over the next three years, the InterContinental, Mandarin Oriental and Regent International hotel chains are all expected to open here, offering posh amenities, spas, and services -- for more than $400 per night.
A few luxury boutique hotels have opened in Boston in recent years, but the city's only other luxury hotels associated with major brands are Four Seasons Boston on Boylston Street, which opened in 1986, the 193-room Ritz-Carlton Boston Common which opened in 2001, and the 75-year-old Ritz-Carlton Boston on Arlington Street.
Now, after several years of a weak market for hotel financing, developers and hotel chains are looking to expand again, and Boston is fertile ground.
"What we are trying to do is venture out into the key world cities and some hideaway places and one of the cities that was missing was Boston," said Wolfgang K. Hultner, chief executive for the Americas at Mandarin Oriental Hotel Group. "Boston has always been a very good business community. I think it's a key city in North America."
Boston's tourism promoters said that attitude is a good sign Boston is shedding its image as inferior to destinations like New York and Paris.
"The fact that you have these three brands coming into the city says that this is a city where they need to have a stakehold because it truly is a global business destination and a top leisure destination," said Patrick B. Moscaritolo, president of the Greater Boston Convention and Visitors Bureau. "It's a vote of confidence in the long term for these brands to be coming into the city."
The hotels' arrival, however, is being driven as much by the local housing market as by those seeking a pampered place to spend the night.
Each of the projects has a luxury condo component -- a symbiotic way of marketing concierge services to would-be buyers, mostly aging baby boomers -- while using their down payments to subsidize costly construction of the lodging rooms.
Attaching condos to the hotels helps their developers because they can sell the apartments before ground ever breaks, giving the millions in needed cash up front, industry specialists said. In turn, having the names of such tony hotel projects associated with the condominiums makes them a lot more attractive to buyers.
"You have the possibility that the developers will have to put up little to no equity at all," said David Harrison, a director at Fitch Ratings, a New York bond rating firm that monitors hotel financing deals.
Developer Brian Fallon's $330 million Residences at the InterContinenal project is already under construction on Atlantic Avenue, with contracts signed for 30 of its luxury condos, even though neither the homes nor the hotel won't open until 2006. Fallon is selling 130 condos for $600,000 to $6 million.
For that price, residents will get access to the adjacent 424-room hotel's concierge, valet parking, spa and other services.
It's those kinds of perks developers are betting condo shoppers and affluent travelers will be willing to pay for.
The new Regent International, part of developer Harold Theran's Battery Wharf project -- scheduled to open in 2007 -- will have a spa, and a marina condo residents will have access to.
And Robin Brown's Mandarin Oriental Hotel -- expected to open in 2007 on Boylston Street near the Prudential Center -- will let the owners of its 50 condos use the 15,000 square-foot-spa and order room service on their private roof decks.
But it would have been impossible to get the hotel built without also building condominiums, Brown said.
Not every developer agreed with that assessment, though.
Francois L. Nivaud, project consultant on the Battery Wharf development, said that building hotels with condos attached is the latest trend in hotel financing, but that doesn't mean that hotels can't be built if condominiums aren't included.
"I don't think that you can say that the only way to get a top flag is to do a condo and a hotel," Nivaud said. "It just makes more sense for the residences. People are demanding the services today, and the only way to provide the services is to have the hotel."
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