Downtown Readies for Upscale Hotel

Westin near arena to round out entertainment corridor

ANDREW BELL

The Daily News

Within weeks, plans could be finalized for construction of a major hotel across from the $250 million FedExForum scheduled to open in the fall.

A joint development by Memphis-based Performa Entertainment Real Estate Inc. and Nashville-based Senate Hospitality Group LLC would add a 220-room Westin Hotel to a site currently used as a parking lot between Blues Alley and Lt. George W. Lee Avenue, just north of the Gibson Guitar Factory.

Major development. Dave Jones, one of four principals of Senate Hospitality, said final agreements concerning the hotel and a major restaurant to accompany the hotel are about two weeks away.

I really wouldnt want to say anything (more) right now because of the political turmoil going on in the city, Jones said. Im afraid it might spill over onto the sidewalks with everything were trying to do.

Cost for the hotel and a 420-car parking garage is estimated at $30 million.

Local architecture firm Hnedak Bobo Group has been tapped to design the hotel; work is expected to take about 15 months.

Hotel room shortage. According to the Memphis Convention and Visitors Bureau, there are about 2,300 hotel rooms available Downtown. Local tourism officials have said many more rooms are needed to help support Downtown revitalization and accommodate guests of Cook Convention Center events.

Center City Commission president Jeff Sanford said as of yet, no parties involved with the proposed Westin Hotel have inquired about applying for CCC development tax incentives.

But, he said developers are reacting to what he called a first-class hotel room deficit Downtown.

It doesnt take a real estate genius to see that (the Westin site) is a great site for a hotel, not just because its across the street from the Forum but because its so well located in a rapidly growing sports and entertainment district, Sanford said.

Upscale rooms. Douglas Browne, general manager of The Peabody, expressed doubts about the ability of the Downtown market to embrace the high rates a Westin property could charge.

I think a new hotel is good for us Downtown, but Im surprised that someone is making that level of investment, Browne said.

Browne, a member of the Memphis Hotel/Motel Association, said the occupancy rate for Downtown hotels is generally about 60 percent; average room rates are less than $100. He said occupancy typically averages in the 70 percent range before new hotels emerge.

My guess is what theyll have to spend to build that hotel, theyre going to need much higher average rates, he said. I think its always nice to have good products, but will the market pay for it is another story.

Future potential. Sanford said as Downtown development activity flourishes, investors are making decisions based on the areas future potential.

Investors look at the Downtown market, and if Westin is the flag, it will be a positive indication that people knowledgeable in the hotel industry think theres a need for more upscale rooms, he said.

Westin Hotels and Resorts owns and manages more than 100 hotel and resort properties in 25 countries.

In the works. Also Downtown, the CCC is working with developers who want to re-establish a hotel in the 91-year-old former Chisca Hotel structure at 272 S. Main St. Additionally, the Downtown Marriott is expanding by 200 rooms, and talk is ongoing about two other possible Downtown hotel developments.

Sanford said a new hotel doesnt necessarily spur additional hotel development in the immediate vicinity.

Hotel developers read the market in terms of tourism as well as first-class office space, which remains weak in Memphis and Downtown, he said. But were hoping for many more hotel rooms in the Downtown area.

Ground zero. The proposed Westin Hotel would be built directly behind a number of businesses on the north side of Beale Street, including Silky OSullivans, located at the corner of Third Street and Beale.

Dennis Flanagan, OSullivans comptroller, said the addition of FedExForum and the upscale hotel will make that area the focal point of Downtown.

Were already at ground zero here, and a hotel would absolutely mean more growth it would mean nothing but more business, Flanagan said.