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VOL. 122 | NO. 112 | Monday, June 18, 2007

Enhancing a Landmark

Davidson plans $8M renovation of East Memphis hotel

By Eric Smith

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HIGH RISE: Davidson Hotel Co., which bought the 27-story landmark Hilton Memphis hotel in May, has just begun a four-year, $8 million renovation of the building. This follows a $12 million rehab completed in 2004. -- Photo Courtesy Of Davidson Hotel Co.

With its 30th birthday less than two years away, the Hilton Memphis' new owners are making sure the iconic hotel ages gracefully.

Built in 1979, this East Memphis landmark is undergoing yet another renovation, this one an $8 million, four-year process courtesy of Davidson Hotel Co., the Memphis-based company that bought the 405-room building in May for $45 million.

And while the hotel underwent major upgrades just a few years ago - about $12 million worth - Davidson executives are hoping to hold true to their own standards, as well as those of Hilton, by bringing the entire building further up to date.

"It's a staged renovation. It's not the big splash that we did three-and-a-half years ago when we re-flagged the hotel from an Adams Mark to a Hilton and just totally modernized the entire property," said Davidson chief operating officer Pat Lupsha. "What we're doing is essentially updating the infrastructure of the building."

Room to grow

The 27-story Hilton Memphis, with its instantly recognizable glass silo shape, is at 939 Ridge Lake Blvd. in the high-profile, highly trafficked Poplar/Interstate 240 corridor.

It has experienced highs and lows since opening, much of them stemming from the myriad names that have appeared atop the 300,000-square-foot cylinder.

It began as a Hyatt Regency, was converted to an Omni Hotel, re-branded as an Adam's Mark Hotel and then to a Park Vista. Finally, the hotel became a Hilton - the city's only Hilton Hotel - in 2004.

Then-owner CHD Memphis I had bought the hotel in 2003 and brought Hilton's trademark "H" to the top of the building. That same year, Davidson began managing the hotel, and it eventually purchased the hotel with partner Columbus, Ohio-based RockBridge Capital Partners. It marked the companies' seventh joint venture.

Lupsha said he couldn't be happier with the product his company has acquired.

"We think it has aged well," he said. "It's one of the busiest hotels in the city."

But there's still room for improvement: March occupancy was 77.2 percent, down 6.1 percent from the same period a year ago, according to a Smith Travel Research report. And occupancy for the 12 months ended March 31 was 71.6 percent, down 4.6 percent from the year-ago period.

"It's a staged renovation. It's not the big splash that we did three-and-a-half years ago when we re-flagged the hotel from an Adams Mark to a Hilton and just totally modernized the entire property. What we're doing is essentially updating the infrastructure of the building."
- Pat Lupsha
Davidson Hotel Co. chief operating officer

Still, that's far above the 40 percent range Lupsha cited when Davidson took over management of the property. So he's overjoyed with the progress that's already been made.

"We're most pleased with the investment," he said.

Efforts to stay competitive

The Hilton Memphis' amenities include a fitness center, gift shop, the Rooks Corner restaurant, a lobby bar and more than 30,000 square feet of meeting space.

One of the reasons Davidson has launched this renovation was to meet Hilton brand standards, which are stringent. The goal is to stay competitive and maintain the brand's demands for high-quality hotels.

"The brands require that we set aside a certain percentage of our income each year to be able to keep properties updated and fresh," Lupsha said. "What they do twice a year for Hilton ... is send out an inspector who evaluates the quality level of the facility and then subsequently informs the brand what is needed. It's our job to define what that is."

Davidson has defined the newest set of renovations based on the last set in 2004, trying not to duplicate its previous efforts.

"We did the entire inside of the hotel, from carpet to furniture, wallpaper, paint, the whole works," said Davidson corporate sales assistant Cyndi Carl. "That's been done and it's great. What needs to be done now are little touches here and there."

A chief focus for Davidson is making sure the hotel continues to look good to the thousands of drivers who pass by each day. One enhancement will be a wet-sealing to the exterior, no small feat considering the entire outside of the building is basically windows.

"As the building ages, it becomes less energy efficient," Lupsha said. "Essentially we are caulking everything so the building will be far more energy efficient going forward."

Another energy efficient move will be replacing the 21-year-old air-conditioning units in all 405 rooms, a welcome change, Lupsha noted, for anyone visiting Memphis in the summer.

"While that doesn't sound too exciting," he said, "if you're the guest, it's a great thing."

Customer-pleasing enhancements

Other enhancements include new equipment and flooring for the hotel's 1,000-square-foot fitness center and a new porte-cochere, which is the entrance vehicles pass through when arriving at the hotel.

"It's going to be a lot nicer and a lot easier to get in and out of," Carl said.

Though much of the overhaul commenced earlier this month, the most extensive component will occur in year three when Davidson again revamps its guestrooms.

"The hotel was completely renovated three-and-a-half years ago, and we're going to be doing the guestroom portion once again in three years," Lupsha said. "That's what we've dialed in for this new investment."

The investment will include 32-inch, flat-panel televisions, already on order, for each room. New carpeting, drapes, bedspreads and chairs will come later.

Lupsha said he believes these will be welcome changes for Hilton Memphis guests, but it also will benefit the growing Davidson, as the company puts its stamp on another one of its 30 hotel properties.

"It's wonderful to be able to bring in new potential clients and show them what we've done," Lupsha said, "to show them the before and after photos, to show them the results."

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