Gayle Benson, Partners Buy New Orleans' Hyatt Regency; 1st Local Owners of Landmark Hotel
Anthony Mcauley | The Advocate, Baton Rouge, La. | April 5, 2019 12:00am
April 05-- Apr. 5--New Orleans Saints and Pelicans owner Gayle Benson is purchasing the Hyatt Regency Hotel near the Mercedes-Benz Superdome, adding another piece of marquee downtown real estate to the growing portfolio of Benson-controlled buildings in the area.
The deal, which is set to close Friday, puts the Hyatt in local hands for the first time in its 43-year history and follows a multimillion-dollar renovation of the hotel that began in 2010. The terms of the deal were not disclosed, but comparable recent hotel sales suggest the purchase price could be around $300 million.
Benson is buying the hotel along with two partners, longtime local developer Darryl Berger, whose interests via the Berger Co. include the Windsor Court, Omni Royal and Omni Riverfront hotels, and New Jersey-based hotel asset management firm Fulcrum Hospitality.
"My late husband Tom believed in reinvesting in our community, and that philosophy has made our city a better place," Benson said in a statement announcing the transaction. "Our investment in the Hyatt will continue that legacy."
The Hyatt sits near Poydras Street and Loyola Avenue within close walking distance of the Superdome and the Smoothie King Center, where the Saints and the Pelicans play, and has become a prime gathering spot for fans attending Saints games and other big events.
That strip of Loyola has seen a surge in development in recent years, with new luxury condo towers just a block away in what developers call the South Market District. The street is also home to a streetcar line which extends Canal Street line service to the Union Passenger Terminal at Howard Avenue.
Sale of the 1,193-room Hyatt is the largest hotel transaction in New Orleans since the 1,572-room Hilton Riverside sold for $400 million in 2010.
The Hyatt is the third-largest hotel in the city after the Hilton and the 1,333-room Marriott, but it is the largest in terms of meeting space, with more than 155,000 square feet, according to consulting firm STR, which tracks hotel industry data.
The new owners plan to keep Hyatt Hotels as the management company. They also plan to spend about $20 million in the next few years on improvements, but noted that the hotel was completely renovated after it was bought by Poydras Properties in 2010.
The building had been shuttered for six years in the wake of Hurricane Katrina until the $225 million overhaul.
The deal is the first foray into hotels for Benson, whose business empire in New Orleans includes the city's NFL and NBA franchises, Benson Tower adjacent to the Superdome, Dixie Brewing Co. and several car dealerships -- all inherited from her husband Tom Benson after his death in 2018.
"The Hyatt purchase certainly makes geographical and strategic sense (for Benson) from the perspective of the entire area," said an official close to the deal. "Further enhancing that area and investing in that area will help Champions Square and as a result hopefully will enhance the fan experience for both the Saints and Pelicans."
The Benson family bought several buildings adjacent to the Superdome in 2009, including the 26-story Benson Tower and a parking garage, and redeveloped them with a view to spurring a revival of the "sports entertainment district" and the upper Poydras Street corridor, which had been heavily damaged by Katrina.
Still, the Hyatt purchase marks a significant bet on the continued success of that strategy, one now made with Gayle Benson firmly at the controls.
New Orleans' hotel industry has been doing well, with total room nights sold last year topping 10 million for the first time ever. Revenue reached almost $1.6 billion, up 23 percent in the past five years, according to STR.
"An opportunity to acquire an asset of this significance only comes around once in a generation," said Ben Tiller, a principal in the Berger Co. "We're still a growing market. Some of it happens in jumps, both in terms of hotel rates and occupancy levels, but we're looking forward to continued growth in the market."
New Orleans' largest hotels generate much of their business from the conferences and major sports events that regularly draw visitors to the city, and recent data suggest they have been less vulnerable than smaller hotels to competition from the explosion in short-term rentals across the city.
"The New Orleans market has strong leisure and strong group demand," said Jan Freitag, an analyst at STR, who noted that average room rates in the city last year were steady at $151, compared to a national average of $130.
The market has about 41,000 hotel rooms now with a further 5,600 rooms in the pipeline from projects that include 1,200 at a proposed hotel addition to the Ernest N. Morial Convention Center, and another 350 from the Four Seasons World Trade Center redevelopment.
But Freitag said that demand growth over the past five years has been outstripping supply, so the added rooms should be easily absorbed if the trend continues.
"We love everything about this transaction," said Darryl Berger. "The city, the market, the asset and the partnership."
The companies haven't disclosed the ownership split of the special-purpose company created to buy the Hyatt. Often, asset management companies, like the Berger Co. and Fulcrum Hospitality, will take minority stakes and earn fees for the transaction and ongoing management.
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