This should please Tom Brady’s father: Some prominent area developers plan to build six hotels in downtown Buffalo over the next several years.
The burst of activity includes both the recently opened Hotel @ The Lafayette and the Lofts on Pearl and four other projects in development at the Tishman Building, the Curtiss Building, the Donovan State Office Building and the Webster block.
The new hotels would add more than 500 rooms to the local market, and business leaders say the developers’ commitment of hundreds of millions of dollars to the projects is only the latest sign that people want to visit and stay over in downtown.
“If we become as excellent as we all have the potential of becoming, we’re going to pull them in from Pittsburgh and Cleveland and Youngstown and Binghamton,” said Earl Ketry, founder of Pearl Street Grill & Brewery, who developed the Lofts on Pearl hotel in the Webb Building. “I think what we need to do is get excited about Buffalo and not worry about whether there’s too many hotels.”
The recently opened or planned hotels are all part of mixed-use developments that include restaurants, retail stores, office space, banquet rooms and two ice rinks.
Five of the six involve the rehabilitation of a historically significant — or at least old — building, and most are receiving some form of taxpayer subsidy.
“It’s more expensive than building new,” said Mark E. Hamister, chairman and CEO of the Hamister Group, which plans to buy and renovate the Tishman Building on Lafayette Square. The project includes a Hilton Garden Inn and has received $1.57 million in sales and mortgage recording tax savings from the Erie County Industrial Development Agency.
The developers, city officials and people with long experience in the hospitality industry say downtown Buffalo should absorb the extra room inventory.
But some observers wonder whether the influx of rooms will take business away from older hotels downtown or the suburbs. And they say the city still will be left without the kind of hotel needed to bring in larger conventions and meetings.
Hotels downtown had an average occupancy rate of 67 percent for 2011, besting the 59.9 percent for hotels nationally, according to Visit Buffalo Niagara and STR. Downtown hotels charged an average daily rate of $104.12 last year, above the national $101.80, they reported.
“That shows a hotel industry that is vibrant in downtown Buffalo,” said Gary D. Praetzel, dean of Niagara University’s College of Hospitality and Tourism Management.
Before the Hotel @ The Lafayette opened this spring, downtown boasted 1,746 hotel rooms, said Visit Buffalo Niagara.
The six new projects include 576 rooms — a 33 percent increase in downtown’s inventory — though the 200 rooms included for the Webster block project are an estimate.
Does downtown Buffalo need all of these hotel rooms?
“I believe part of it is survival of the fittest. You will see some natural attrition — there’s no question about it,” said Mark D. Croce, owner of Statler City and a slew of downtown taverns and restaurants. “The market isn’t going to support all the different proposed hotels.”
But the developers say banks wouldn’t lend money for these projects if they weren’t convinced of the demand. And the involvement of the nation’s biggest hotel chains is a positive sign, said Brendan R. Mehaffy, executive director of the city’s Office of Strategic Planning.
“It’s not the local investors, it’s the national brands, the national flags, that are saying there’s demand,” he said.
HVS, a hospitality consulting and research firm, determined through a market study for the Hamister Group that downtown Buffalo needs another 540 hotel rooms. “There is enormous demand for these hotels,” Hamister said.
Lafayette was first
The first of the six to open was the Hotel @ The Lafayette.
Rocco Termini’s $42 million renovation restored the hotel, adding loft apartments, the swanky Mike A’s steak house, a florist, a home-furnishings shop, Butterwood Desserts and Ketry’s Pan-American Grill & Brewery.
The 57 hotel rooms all have a different image from the 1901 Pan-American Exposition, sliding barn doors to the bathrooms and gray hardwood floors.
The weddings booked for the banquet rooms drive demand for the hotel, which has been at a 75 percent occupancy rate since its opening, Termini said. “People want to stay someplace cool,” he said.
The $9.2 million renovation of Termini’s Webb Building, located at 90-92 Pearl St., next to Pearl Street Grill & Brewery, initially included loft apartments.
But Termini’s partner, Ketry, said the popularity of the building’s banquet rooms prompted him to convert the apartments to hotel rooms, and the 32-room hotel opened last week.
Two-bedroom suites start at $200 a night, with gas fireplaces in every room, and guests will be able to get room service from Ketry’s nearby Brawler’s Back Alley Deli. The hotel lobby, which faces Pearl Street, has four “orange” seats from Memorial Auditorium.
Benderson Development’s estimated $30 million conversion of the former Donovan State Office Building to One Canalside includes the future headquarters of the Phillips Lytle law firm, retail and restaurant space and a 96-room Courtyard by Marriott hotel.
The hotel portion of the building is expected to open in spring 2014, said Eric Recoon, a Benderson vice president.
“We’re confident that having the pre-eminent hospitality franchise and an outstanding location will position us for success,” Recoon said in an email.
Across Scott Street from One Canalside, a company affiliated with the Sabres, HARBORcenter Development, is planning a hotel as part of its development of the city-owned Webster block, formerly used as a parking lot for office workers and hockey fans.
The $123.2 million project would boast two ice rinks, for recreational and amateur skaters, a restaurant and shops on the first floor, a parking ramp and a hotel with approximately 200 rooms, said Sabres spokesman Michael Gilbert.
The hotel would be the last phase of the project to come on line, with an opening date of March 2015, Gilbert said.
On the north side of Lafayette Square, the Hamister Group is redeveloping the Tishman Building, best known as the former home of National Fuel, and plans to close on it next month.
The company plans to move its headquarters into the building while converting part of the structure to 18 apartments and another 14 floors to a 123-room Hilton Garden Inn. The hotel in the roughly $40 million project would open by summer 2014.
Croce said he’s moving ahead with his plans to convert the Curtiss Building, at Franklin and West Huron streets, to a 68-room luxury hotel. He said he put the renovations on hold as he concentrated on the complex Statler City project.
Financing is almost in place for the $18 million renovation, with construction expected to begin in the spring. “It’ll be top of the market,” Croce said.
History of subsidies
Most of these projects are slated to receive public subsidies, and that’s nothing new.
The News in 2008 calculated that hotels in downtown — including the Hyatt Regency Buffalo, Adam’s Mark Buffalo and the Hampton Inn & Suites — had received $65 million in public subsidies since the early 1980s.
In addition to the tax breaks awarded to the Tishman rehabilitation, the ECIDA awarded $900,000 in sales tax breaks to the One Canalside project.
And the Hotel @ The Lafayette received federal and state historic preservation tax credits, with the Buffalo Urban Renewal Agency approving an $800,000 loan to help advance the project in May 2011.
“The whole city is trying to build limited-service hotels,” said Paul L. Snyder, part owner of the Hyatt Regency and chairman of Snyder Development. “To make it worse, they’re all getting public assistance of one kind or another.”
Snyder said his Hyatt Regency and the Adam’s Mark are the only full-service hotels downtown, which he defines as offering features such as first-class dining rooms, ballrooms, a gift shop and beauty salon.
Why are so many hotel projects coming on line now?
Croce said lending institutions for a time were wary about backing hospitality projects, but financing is loosening now.
Mehaffy, the city official, said it’s a sign of the rising interest in downtown Buffalo, as reflected in the crowds who flocked to Canalside and to the weekly summer concerts in Larkinville, centered around the former Larkin Company warehouse on Seneca Street.
The new hotels also are tied into the growing downtown wedding and party business, and concerns about drinking and driving also are spurring attendees to plan ahead and rent a hotel room.
Travelers also want to stay somewhere new and fresh. A certain New England Patriots quarterback in February criticized Buffalo’s hotel inventory as “not the nicest places in the world,” saying his father had a hard time finding a decent room when the Pats traveled here.
Termini offered to put up Brady’s father this fall at his Hotel @ The Lafayette but didn’t get a response.
Some hoteliers say the older hotels in Buffalo and the suburbs will lose business to the newer establishments.
“The losers are going to be tired, not-well-kept, not-well-managed properties,” said Dennis P. Murphy, founder and CEO of Innvest Lodging, which owns The Mansion hotel, and chairman of the boards of Visit Buffalo Niagara and the Buffalo Niagara Convention Center.
Michael Montante, a vice president with Uniland Development Co., said he isn’t too worried about more competition for Uniland’s Avant Building, home to an Embassy Suites. “I think a rising tide raises all ships,” Montante said.
But the latest hotel projects still don’t address the perceived need for a 600-plus-room convention hotel in Buffalo, a venue that would allow the region to pursue larger events and spur the construction of a new, bigger convention center. “The driving force behind a new convention center is having adequate and convenient parking and hotels,” said developer Carl Paladino.
But other developers say the new hotels, and the competition they’ll generate, is good for everyone. “It’ll force them to step up. And that’s what you want everybody to do. You want them to step up,” Termini said.