Downtown Kansas City grows its skyline with new hotels
Seventy rooms open, 261 nearly so and about 1,670 to go in Kansas City’s downtown hotel renaissance.
The 112-year-old Gumbel Building at 801 Walnut quietly opened its doors June 10 as a Hampton Inn after a 70-room renovation. It’s the first of 10 new hotels proposed for downtown and the Crossroads Arts District.
Within weeks, the dual Marriott hotels at 1535 Baltimore Ave. will open as a side-by-side 108-room Residence Inn and 153-room Courtyard Hotel.
The two properties are first out of the blocks among a flurry that could add about 2,000 new hotel rooms to the 3,451 that now exist in downtown and Crown Center. That counts the 800-room Hyatt convention center hotel announced in 2015.
The attention-grabbing Hyatt’s target opening date has been pushed back to early 2019. Slowed by a thwarted petition drive that would have required a public vote for it to proceed, the project is slogging forward to nail down financing and land acquisition, according to Mike Burke, who leads the development team.
Meanwhile, the Marriott properties, announced in 2013 by Chartwell Hospitality and built from scratch, will make the first big splash when they open next month. Progress has been unencumbered by taxpayer protests, given that the project sought no tax abatements or other incentives.
“We believed our project would stand alone without incentives,” said Will Schaedle, a Chartwell Hospitality executive. “We underwrote the hotel to self-sustain” — meaning that the Tennessee-based company was confident room occupancy and rates would justify the investment.
Chartwell, like several other out-of-town developers, saw promise in the Kansas City market. Enticed by residential and entertainment growth downtown and in the Crossroads, they have joined local interests, all hoping to take a bite out of a bigger business, convention and tourism pie by offering an array of boutique, small and limited-service hotels.
But when — or if — mints will lie on the pillows of every intended establishment remains up in the air.
An ambitious renovation of the Savoy Hotel into a sleek new 21c Museum Hotel keeps getting pushed back. The Nashville-based company, which obtained an option to buy the historic property in mid-2013 and sold or gave away its historic artifacts, now says construction of its 120-room luxury hotel will begin “by the end of the year,” nearly two years after its first estimated start.
Similarly, a once-projected December 2015 opening of a 75-room Holiday Inn Express in the Interstate Building has passed. Interior renovation work continues on a complete renewal of that 100-year-old building at 417 E. 13th St., across the street from the Jackson County Courthouse.
Developer Mark Patel said the 13th Street hotel was delayed to get his other property, the Hampton Inn on Walnut, up and running first.
Aside from the convention hotel, the biggest downtown lodging project in the works is a $146.5 million rehabilitation of the former Federal Reserve Bank of Kansas City tower at 925 Grand Blvd.
Developers are forging ahead with plans for a 301-room Embassy Suites plus an adjacent 24-room boutique hotel in an annex. The ambitious project, which foiled previous renovation attempts, was made feasible by a public financing agreement reached earlier this month.
Work on the historic 21-story tower — vacant and deteriorating since the Fed relocated in 2008 — is expected to start in August and it will be ready to accept guests by spring 2018, according to Doug Stone, an attorney for the developers.
Hotel developers are also rescuing long-empty properties in the Crossroads. The Aparium Hotel Group of Chicago and investors are converting the old Pabst Brewing and Pendergast Distillery buildings at 2101-2107 Central Ave. into a 124-room hotel and community meeting place.
John McGurk, attorney for the Crossroads Hotel developers, said the properties are in the redesign process now. The developers are working on financing and hope to open the hotel for guests in the fall or winter of 2017.
Redevelopers also are saving another long-vacant downtown office tower, described in a blight report as having the worst case of interior mold an inspector had seen. The rehabilitation plan is an unusual — for Kansas City — combination hotel and apartment project in the Brookfield Building at 101 W. 11th St.
A Wisconsin-based development team of Great Lakes Management Group and Kothe Real Estate Partners envisions 113 hotel rooms on floors two through nine, topped by apartments on floors 10, 11 and 12.
The Brookfield Redevelopers have signed on with Hotel Indigo, a national hotel group that interestingly also sold a franchise for a Hotel Indigo in the Crossroads.
Neil Hirsch, an Indigo spokesman, said the hotel company is excited about entering the Kansas City market with two properties that “will tell their unique neighborhood stories. We have a number of markets where we have more than one Hotel Indigo hotel — they each provide a unique boutique experience to their guests.”
Crossroads redeveloper Matt Abbott, who bought the former Kansas City Costume building at 2020 Grand, plans to start converting the building to an 80-room limited-service Hotel Indigo this fall, provided the project obtains historic tax credits to help with financing.
Two blocks west of Abbott’s building, excavation for a planned 112-room Hilton Home2 Suites at 2001 Main St. needs only a utility easement to be moved before work can begin, said developer Jason Swords.
Swords, with the Sunflower Development Group, said he expects the hotel to open “11 months from today.”
The site previously housed the Walnut Street ramp that veered northeast off Main Street and a large billboard, both of which required extensive city involvement to clear.
In fact, government involvement — through property tax abatements, tax credits or other incentives — is a part of every new hotel proposal except for the dual Marriott properties on Baltimore.
Those Marriott flags now have the advantage of leading most of the new pack of hotels to the market. As such, the Residence Inn and Courtyard join eight existing hotels in downtown and Crown Center, all of which have undergone or are undergoing extensive renewals.
The smaller existing properties include the Ambassador, 1111 Grand, with 43 rooms; the Aladdin, 1215 Wyandotte, 193 rooms; the Hilton President, 1329 Baltimore, 213 rooms; and the Phillips, 106 W. 12th, 217 rooms.
The larger properties include Crowne Plaza, 1301 Wyandotte, 385 rooms; Westin Crown Center, 1 E. Pershing, 724 rooms; Sheraton Crown Center, 2345 McGee, 730 rooms; and the downtown Marriott, 200 W. 12th St., 946 rooms.
Is there a dangerous amount of overbuilding?
“I don’t get a sense of backing off,” said Bud Nicol, executive director of the Hotel and Lodging Association of Greater Kansas City. “Demand is picking up. If all open, we may see occupancy rates go down, though the aggregate room count and total occupancy will go up.”
The year-to-date occupancy rate for downtown hotel rooms as of April 2016 was 60 percent, according to VisitKC. That’s up from last year and the market is considered strong, said Toni Alexander, VisitKC’s communication manager.
Nicol said he adheres to the counsel of “a very experienced operator who says the good operators will be able to do well as long as the economy stays strong.”
Those most likely to prosper, he also suggested, are hotels that can get meeting space and food revenues to augment room revenues.
Such multisource revenue might be influencing a possible inclusion of guest rooms in a planned renovation of the former Kansas City Club at 918 Baltimore.
Craig Slawson with Denver-based Epoch Development LLC, which bought the former club last year in a bankruptcy option, said the company continues to work on a plan that “possibly could be associated with an integrated lodging component.”
If so, it will represent a small addition to the planned pillow plethora.