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Pushing the Upper Limits of Price and Luxury, The Nines, a $137 million,
331-room  Hotel in Downtown Portland Opens
By Ryan Frank, The Oregonian, Portland, Ore.McClatchy-Tribune Regional News

Oct. 16, 2008 - The Nines hotel swings open its doors at 9:09 a.m. today and will immediately redefine downtown Portland luxury.

The rooms atop the downtown Macy's store are dressed to start at $249 per night -- nearly twice the downtown average. The Nines will puff out its own scent created by an aromatherapist.The menu at the Urban Farmer restaurant offers a corn-fed beef filet for $43.

The hotel expects to earn four stars -- Portland's first.

The only blemish in The Nines' polish is that it opens in a one-star economy.

Portland's downtown hotel market has been on a steady climb since it recovered from the post-Sept. 11 recession. Occupancy rates and room rates -- the core measures of the market's strength -- stretched to new highs this year.

But the economy is shifting again and the cyclical hotel market will shift with it.

"You may be the Rose City but not in 2009 or 2010," said Jeff Beck, associate professor at Michigan State University's School of Hospitality Business.

Like most downtown hotels, The Nines' revenue will rise and fall with the fortunes of the corporations that are expected to drive much of its business. Sage Hospitality Resources, the hotel's Denver-based owner and developer, expects about half of The Nines' business to come from group events like company sales meetings and product launches from businesses such as Nike.

When businesses cut costs, such as during the financial crisis, travel and external meetings make easy fat to slice. "Many companies are budgeting declines of anywhere from 5 percent to the mid-teens," Beck said.

Even so, Sage's Ken Geist had the look of a relaxed expectant father Wednesday. He said that, unlike in other cities, Portland's hotel market is not overbuilt and hasn't slowed, and the economy is relatively stable.

"We may have a rough 2009, but if we're going to open anywhere I'm glad it's in Portland," said Geist, Sage's executive vice president for development.

The Nines' opening caps years of work by city leaders to save the historic Meier & Frank building.

The building rose in several phases, but the original parts date to 1909. For decades, thousands of Oregonians visited the store at Southwest Sixth Avenue and Morrison Street on cold winter days to find Christmas gifts. They met under the clock and searched for the Friday Surprises.

A few years ago, city leaders worried that the May Co., which most recently owned Meier & Frank, might close the store and leave a vacant hole in downtown's heart. Former Mayor Vera Katz wooed Macy's -- the store's new owner -- to renovate. But first she needed the hotel.

The Nines, Katz said, "saved Macy's. Without it, it would never have happened."

City officials hope The Nines will attract more people downtown to power the shops, art galleries and restaurants nearby.

The city's urban renewal agency pumped nearly $17 million in low-interest loans to make The Nines work. Sage also tapped federal tax credits designed to save historic buildings or help low-income communities.

The result is the $137 million, 331-room addition to Rose City royalty.

The Nines arrives with some dents and scratches, though.

Sage and general contractor Hoffman Construction Co. of Portland ran into unexpected construction troubles during renovations. Sage changed its plans to make the hotel more posh.

Those changes forced the hotel to open 21/2 months late and $18 million over budget. It faces liens from subcontractors who say Sage hasn't paid its bills on time.

On a recent tour, general manager Frederick J. Kleisner Jr. said The Nines fits into Portland's new high-end scene.

"You're on this wave," said Kleisner, a stylish 40-year-old dressed entirely in black. "The level of sophistication in this city. The palate. The quality of food and drink here is better than New York City."

The Nines boasts a 419-piece art collection that would make some museums look puny. One Storm Tharp painting depicts Clark Gable who, legend has it, once sold ties in the building for Meier & Frank.

The Nines' design themes came from SERA Architects of Portland and interior designer ForrestPerkins. The rooms are a turquoise called Sonoma sky and an espresso brown. "Ever seen 'Breakfast at Tiffany's'? " Kleisner asks. "Very Audrey Hepburn."

The rooms have a 42-inch high-definition TV and green features to fit one of the nation's greenest cities.

"How do you do luxury in a green ethos?" asked Kleisner, a fifth-generation hotelier. "We're going to be green but not compromise on the guest experience."

That translates into dual-flush toilets. But are the shower heads low flow? "We chose not to," Kleisner said. Luxury guests, it turns out, want a shower head with firm water pressure.

Portland's hotel market continues to outperform the country's, at least according to the most recent figures through August.

Hotel occupancy and room rates have climbed steadily from 2003, the end of the last recession.

Through August, downtown hotels had average room rates of $134 and occupancy rates of nearly 78 percent. Nationally, the average hotel occupancy is just 63 percent through August, according to Smith Travel Research. Of course, the financial crisis that spilled out in September will likely change the figures.

"The (Portland) market in general is defying national trends," said Geist, the Sage Hospitality Resources executive.

The Nines, though, faces challenges unique in Portland.

It's trying to push the bounds of price and luxury in the worst financial crisis in decades. It's likely to be the most expensive place to stay downtown. In August, The Nines put out a news release advertising rates starting at $279. Now, they're at $249 through the end of the year.

By comparison, The Heathman Hotel, another boutique luxury hotel, has rates starting at $189 a night, said Chris Erickson, the Heathman's general manager.

About The Nines, Erickson said: "From a hotelier's vantage point, it would be difficult to have that high a rate and that high an occupancy during a recession."

But downturns, like wildfire, are natural. "These hotels take five years to build and the hotel market is cyclical every five to seven years," Geist said.

Geist said Sage's business plan can handle the trouble. The hotel's owner, a Sage affiliate, has about 35 percent equity in the hotel. Geist now expects 2009 revenue to be 5 percent to 10 percent below original forecasts.

To cope, The Nines' sales staff will be more aggressive. "People who don't know how to manage hotels just lower their rate," Geist said.

Nike officials, brides to be and meeting planners have already toured The Nines for potential events. The hotel has a 350-person event booked for next week and a 500-person meeting the following week. Companies already booked some holiday parties, Geist said.

Beck, the Michigan State professor, has been through his own downturn in the hotel business.

He helped open a Bay Area hotel in 1989, about the time of the region's major earthquake. The hotel owners, whom Beck declined to name, expected room rates at $180 a night. But they ended up at $130.

He said the owners had to pour in extra money for two years. Now, he says, the hotel is flourishing.

Ryan Frank: 503-221-8519;;


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