A Hotel for downtown Royal Oak?

[Bham1982]

One, just because you can't get financing in an era of the most restrictive lending market in 50 years does not prove a point about hotel room demand.

Not true. There are U.S. cities with dozens of hotels rising. Hotel financing isn't difficult when there are positive market fundamentals. We have weak fundamentals, so banks aren't willing to finance locally.

Two, the fact that you and others are lumping together "hotel rooms" into one pool demonstrates a total lack of knowledge about hotels. Three and four-star hotel customers do not defer to one-star accomodations when there are none better... they find somewhere else to go.

How do you think hotels get these stars? Based on demand and corresponding upgrades. If there were demand, these hotels wouldn't be crappy one-star hotels. They would be upgraded. There's nothing preventing other hotels from matching the Townsend.

There are few middle-upper and upper-end hotel offerings in the metro area, including Oakland County.

Exactly! There isn't demand. If there were demand, then existing hotels would upgrade, and new hotels would be built.

There's nothing preventing, say, the Somerset Inn in Troy, or the Kingsley Inn in Bloomfield Hills from becoming a luxury hotel, except for the convenient fact that there's no demand!

The Kingsley Inn has $65 rates. If it were in a high demand market the hotel would generate $200 rates, and would receive the appropriate upgrades.

Three, the only "high-rise" hotel in Southfield that I know of vacant is the former Holiday Inn,

The Park Plaza hotel is also abandoned. The Northland Inn was abandoned and demolished. The former Sheraton is some fleabag independent.

This hotel in RO and the ones in Birmingham are very attractive sites, that provide a great location for business travelers and tourists.

So attractive that no financing is available, and no operator has signed on, even though both cities have been pitching sites for a decade or more?

Only two non-subsidized luxury hotels have opened in Metro Detroit in the last 20 years. If you want more luxury hotels, fine, but taxpayers will subsidize the hotels, and older hotels will suffer in a zero sum game.

[Novine]

"How do you think hotels get these stars? Based on demand and corresponding upgrades. If there were demand, these hotels wouldn't be crappy one-star hotels. They would be upgraded. There's nothing preventing other hotels from matching the Townsend. "

Way oversimplifying how the market works. There's all kinds of factors that would explain why a crappy motel doesn't get upgraded into a luxury hotel that have nothing to do with supply and demand.

[cramerro]

Not true. There are U.S. cities with dozens of hotels rising. Hotel financing isn't difficult when there are positive market fundamentals. We have weak fundamentals, so banks aren't willing to finance locally.



How do you think hotels get these stars? Based on demand and corresponding upgrades. If there were demand, these hotels wouldn't be crappy one-star hotels. They would be upgraded. There's nothing preventing other hotels from matching the Townsend.


Exactly! There isn't demand. If there were demand, then existing hotels would upgrade, and new hotels would be built.

There's nothing preventing, say, the Somerset Inn in Troy, or the Kingsley Inn in Bloomfield Hills from becoming a luxury hotel, except for the convenient fact that there's no demand!

The Kingsley Inn has $65 rates. If it were in a high demand market the hotel would generate $200 rates, and would receive the appropriate upgrades.



The Park Plaza hotel is also abandoned. The Northland Inn was abandoned and demolished. The former Sheraton is some fleabag independent.



So attractive that no financing is available, and no operator has signed on, even though both cities have been pitching sites for a decade or more?

Only two non-subsidized luxury hotels have opened in Metro Detroit in the last 20 years. If you want more luxury hotels, fine, but taxpayers will subsidize the hotels, and older hotels will suffer in a zero sum game.

This is an oversimplification. While some high-end hotels can go down in rating over time, the opposite just isn't true. It's silly to say that because the motels along 11 Mile in RO haven't upgraded to Hilton means that there is no demand for higher rated hotels, or that if there was they would just charge $200/night. And, a lot depends on the ability and willingness of a hotel owner to spend millions to upgrade and/or switch to a new franchise.

Higher end hotels have to be new construction or major renovation of landmark properties. The room sizes, amenities, and designs cannot be inserted into any hotel/motel structure if the demand warrants. In addition the hotel towers you speak of in Southfield that have long since lost their lustre suffer from outdated buildings, facilities, and declining property values and A-rated office occupancy in the City, IMO.

[Danny]

The property isn't big enough for all they are proposing...unless of course they ditch the parking garage.

The developers can put a parking garage just below their 5 star hotel. Soon all of Main Street Royal Oak will look like Hoboken, New Jersey in 100 years. Let us beat the Downtown Birmingham, Michigan's skyline, Royal Oak.

[daddeeo]

The reason why there isn't more retail in RO is that the restaurants and bars have raised the square footage prices through the roof and regular stores can't afford the rent.
It's been that way for years. Once the yuppies came in, the whole city retail scene changed. Hasn't been the same since Patti Smith left.

[MSUguy]

Only two non-subsidized luxury hotels have opened in Metro Detroit in the last 20 years. If you want more luxury hotels, fine, but taxpayers will subsidize the hotels, and older hotels will suffer in a zero sum game.

Who said anything about this being luxury hotel and there being no their being no operator? "At a Wednesday meeting, the development authority's board is scheduled to discuss the project for Hotel Indigo — a line of boutique hotels owned by United Kingdom-based InterContinental Hotels Group, which also operates Holiday Inn and Staybridge hotels."
"
From The Detroit News: http://www.detroitnews.com/article/2...#ixzz1v3oGCyfz

Hotel Indigo is not a luxury chain, it is mid-priced and competes with Aloft[[a cheaper version of their upscale W brand) from Starwood. You may remember that an Aloft is planned for the David Whitney Bldg downtown. You point out the the empty hotels in Southfield, but you have to factor the city's decline as an office market which is where a a good bulk of their business was coming, they've lost business to other burbs and recently to downtown with Blue Cross and DTE. This hotel doesn't have a lot of nearby competition at it's price level, it's a near a major office market in Troy and it's offers a unique location being in a walkable downtown, while it nearest competition in Troy and Sterling Hgts are in very bland, suburban location. The Detroit hotel market isn't great, but it's not as dire as you think vacancy rate are not way below the national average.






The Detroit market, which consists of about 40,000 rooms, reported a 66.3% occupancy rate in June, putting the metropolitan area on par with overall U.S. occupancy and ahead of markets such as Atlanta, Houston and Tampa-St. Petersburg.
...
Granted, with a $77 average room rate, Detroit remains near the bottom of the 25 largest U.S. markets when it comes to RevPAR.

http://www.travelweekly.com/Travel-N...pick-up-speed/


The Detroit hotel market currently ranks 23rd out of 25 U.S. metropolitan areas in Michigan State University's [[MSU) Lodging Market Potential Index [[L-MPI©), but the news might not be all bad, according to Steve Marx, owner of Hotel Source, Inc., a Chicago-based real estate brokerage and advisory services firm. The index also indicates that Detroit's tourism has been steadily improving over the last five years and its hotel market supply [[room inventory) and absorption [[new hotel pipeline) ratio is also relatively positive.

.http://www.researchcorridor.com/feat...dex110711.aspx

[nain rouge]

As much as I want to see Royal Oak [[or any of our cities) become more urban, until Royal Oak actually starts gaining population, it's about maxed out for new retail spaces. Royal Oak and Ferndale [[which has also been losing people for decades) have both tried the "build it and they will come" approach outside of the immediate downtown areas, only to see the retail developments largely flop.

Most visitors to Royal Oak from other Metro Detroit cities aren't going to bother explore past a few blocks on Main and Washington. To build up an urban retail environment outside of those areas will first require more daily traffic from actual residents, which will only happen if Royal Oak can get back up to 70,000 or 80,000 residents.

While a hotel isn't retail, it's still within the service sector. And to get back up to 80,000, Royal Oak will to add jobs outside of the service sector, which tends to be low-paying.

[rb336]

And that's exactly my point.

If there were demand, it wouldn't have deteriorated to an "outdated dive".

If there were demand, the Woodward motels wouldn't be sleazy.

It's design was outdated and to upgrade it essentially required near-complete demolition, so it was left to rot. The Woodward motels are not exactly in prime locations for hotel real estate.

[Bham1982]

. The Woodward motels are not exactly in prime locations for hotel real estate.

The most recently demolished Woodward motel was at Woodward & Maple, in downtown Birmingham. That's arguably the most prime intersection in the metro area.

I don't think that many will agree that Woodward isn't a prime location. If Woodward isn't prime, then I don't know what is. 28 Mile Road?

[Novine]

What makes you think that location on Woodward is a prime location for a hotel? Just because Woodward is heavily traveled doesn't mean it's ideally suited for a hotel. I wouldn't build a hotel on Middlebelt in West Bloomfield because it makes little sense. But it's the prime place to build one if you're on the same road in Romulus because it's near the airport. It's all about location and a Woodward location may make little sense even if it's otherwise a great location for other uses.

[cramerro]

The most recently demolished Woodward motel was at Woodward & Maple, in downtown Birmingham. That's arguably the most prime intersection in the metro area.

I don't think that many will agree that Woodward isn't a prime location. If Woodward isn't prime, then I don't know what is. 28 Mile Road?

The hotel that was demolished was old and in disrepair. Contrary to your claims, just having a good location or modest demand doesn't mean properties automatically upgrade. And as I mentioned, that demolition and property assembly was funded by a development group that has approved plans for a new hotel there.

Novine's comments about Woodward are spot on... esepcially a botique hotel isn't going to go in on a renovated 1950's motel property along a busy suburban arterial.

[DetroitScooter]

The new hotel would be packed on the weekends with local overnighters and their event facility would be solidly booked, probably year-round. They would make a large percentage of their money on events and catering. Considering the kind of money that the outdoor/Farmer's Market party events seem to generate, can you imagine having a year-round, indoor, catering facility complete with booze license? That's a no-brainer. Attach a well-run small apartment building [[allowing some shared services and a constant cash flow) and you've got quite a business plan.

In an old job, we had frequent visitors to our Troy office and they had to stay out there, but unless they were mall/high-end dining types, to a person they all preferred the after work/dining scene of Royal Oak. Since we were the ones assigned to provide transportation to these folks, it was problematic ferrying them around to dinner and then back up to soulless/unwalkable Troy for accommodation. A decent hotel in downtown Royal Oak would solve these problems for those of us living in Royal Oak, i.e. take them to/from work, return to downtown RO to drop them off at the hotel, then park at home and then walk back up to entertain them... then we all can walk "home". It makes a lot of sense to me.

[Bham1982]

A decent hotel in downtown Royal Oak would solve these problems for those of us living in Royal Oak, i.e. take them to/from work, return to downtown RO to drop them off at the hotel, then park at home and then walk back up to entertain them... then we all can walk "home". It makes a lot of sense to me.

Putting aside the fact that business travelers alone don't determine hotel viability, this makes no sense to me.

I travel about 30% of the time for work, and have never heard of a "problem" of a hotel being too far from bars. I don't think that sounds like much of a business plan [[RO hotel will attract business travelers due to being stumbling distance from watering holes).

[Bham1982]

The hotel that was demolished was old and in disrepair. Contrary to your claims, just having a good location or modest demand doesn't mean properties automatically upgrade.

You're right. You need strong demand for upgrades. Metro Detroit doesn't have strong demand.

Novine's comments about Woodward are spot on... esepcially a botique hotel isn't going to go in on a renovated 1950's motel property along a busy suburban arterial.

Again, that's evidence of weak demand. There are $300 a night 50's motels in high-demand parts of the country during peak season.

There's nothing fundamentally wrong with older buildings. It's just that we have too many hotel rooms for the market demand, so the weak get killed.

[DetroitPlanner]

Bham, is it true they are going to put up a motel 6 where the Birmingham Holiday Inn used to be?

[iheartthed]

Putting aside the fact that business travelers alone don't determine hotel viability, this makes no sense to me.

I travel about 30% of the time for work, and have never heard of a "problem" of a hotel being too far from bars. I don't think that sounds like much of a business plan [[RO hotel will attract business travelers due to being stumbling distance from watering holes).

I know people who do but they generally do so but it's usually in more tourist friendly cities.

[Detroitnerd]

I wonder how much of this new development is actually desired by the people of Royal Oak.

I often post here to defend the idea of a strong urban center in Detroit, with good, somewhat dense suburban environments inside and outside the city, and with country estates on the fringe for those who can afford all the costs of living in the boonies.

But here you have an attempt to build up a "downtown" in a suburb. I know there was some resistance to building the new Kroger, the new bowling alley and theater. And now a hotel? Those "lofts" they built aren't even full, are they? I see a city government and a chamber of commerce that see the chance to make a lot of money, at the expense of the identity of the rest of the city.

What happens when the boom's over? What does Royal Oak do with the costs when, inevitably, the center moves elsewhere in our amorphous region? You have a city with a shrinking population being saddled with big-budget properties ... sorta like Detroit. Of course, not on as grand a scale, but still. I do feel a certain sympathy with the people of Royal Oak who simply wanted good schools and a safe community, or the viewpoint of Bham on Birmingham. Why should these bedroom communities turn into miniature downtowns mimicking what we've lost in Detroit?

Heh, I never thought I'd be posting in favor of preserving suburbia, but there you have it. Once they've effectively "flipped" a city into a downtown, where do you go from there?

[Bham1982]

Bham, is it true they are going to put up a motel 6 where the Birmingham Holiday Inn used to be?

The Holiday Inn Express is still there. It seems to do decent business [[based on semi-high rates for the area).

[iheartthed]

I wonder how much of this new development is actually desired by the people of Royal Oak.

I often post here to defend the idea of a strong urban center in Detroit, with good, somewhat dense suburban environments inside and outside the city, and with country estates on the fringe for those who can afford all the costs of living in the boonies.

But here you have an attempt to build up a "downtown" in a suburb. I know there was some resistance to building the new Kroger, the new bowling alley and theater. And now a hotel? Those "lofts" they built aren't even full, are they? I see a city government and a chamber of commerce that see the chance to make a lot of money, at the expense of the identity of the rest of the city.

What happens when the boom's over? What does Royal Oak do with the costs when, inevitably, the center moves elsewhere in our amorphous region? You have a city with a shrinking population being saddled with big-budget properties ... sorta like Detroit. Of course, not on as grand a scale, but still. I do feel a certain sympathy with the people of Royal Oak who simply wanted good schools and a safe community, or the viewpoint of Bham on Birmingham. Why should these bedroom communities turn into miniature downtowns mimicking what we've lost in Detroit?

Heh, I never thought I'd be posting in favor of preserving suburbia, but there you have it. Once they've effectively "flipped" a city into a downtown, where do you go from there?

Yeah, this is what I was saying on the thread about Birmingham a little while back. I don't imagine that many of today's Birmingham residents moved there in decades past with the thought that it would be downtown Southeast Michigan in the future.

[Detroitnerd]

Yeah, this is what I was saying on the thread about Birmingham a little while back. I don't imagine that many of today's Birmingham residents moved there in decades past with the thought that it would be downtown Southeast Michigan in the future.

IIRC, you couldn't even sell a glass of wine in Birmingham until the 1970s, making it effectively a dry city with Prohibition still in effect.

[nain rouge]

Yeah, this is what I was saying on the thread about Birmingham a little while back. I don't imagine that many of today's Birmingham residents moved there in decades past with the thought that it would be downtown Southeast Michigan in the future.

Really, though? These "downtowns" in question are just a few blocks in all reality. I've rode my bike through Royal Oak and Birmingham numerous times, and almost all of the neighborhoods in those cities are as quiet and suburban as Huntington Woods or Sterling Heights. Royal and Birmingham have always had downtowns - those spots are just a little bigger and more popular now. Big deal.

And in Royal Oak's case, the average citizen is benefiting immensely from the tax dollars and desirability downtown gives to the city. Otherwise, Royal Oak would be just like Madison Heights by now.

[iheartthed]

Really, though? These "downtowns" in question are just a few blocks in all reality. I've rode my bike through Royal Oak and Birmingham numerous times, and almost all of the neighborhoods in those cities are as quiet and suburban as Huntington Woods or Sterling Heights. Royal and Birmingham have always had downtowns - those spots are just a little bigger and more popular now. Big deal.

And in Royal Oak's case, the average citizen is benefiting immensely from the tax dollars and desirability downtown gives to the city. Otherwise, Royal Oak would be just like Madison Heights by now.

What's wrong with Madison Heights? Maybe the people who lived in Royal Oak before liked what it was back then. Every city doesn't have to be affluent and filled with drunk yuppies on the weekend.

[nain rouge]

What's wrong with Madison Heights? Maybe the people who lived in Royal Oak before liked what it was back then. Every city doesn't have to be affluent and filled with drunk yuppies on the weekend.

It's not bad. Actually, my girlfriend lives in Madison Heights. But here's one problem: they're running out of money to fund their schools. The city is actually taking money out of teacher's paychecks as part of a retroactive pay cut! Also, the roads are in worse shape than what you'd typically see in Royal Oak, and home values are generally worse, too. My friends in the area that rent homes generally rent in Madison Heights and Hazel Park, not Royal Oak and Ferndale, and there's a reason for that.

[Gistok]

Ummm.... "downtown Roseville" has something like 8 hotels/motels within a 1 square mile radius.... and it still doesn't feel like a downtown....

[DetroitScooter]

Putting aside the fact that business travelers alone don't determine hotel viability, this makes no sense to me.

I travel about 30% of the time for work, and have never heard of a "problem" of a hotel being too far from bars. I don't think that sounds like much of a business plan [[RO hotel will attract business travelers due to being stumbling distance from watering holes).

During the week they sure do. Maintaining a decent overnight occupancy, combined with dynamite weekend business is what makes a hotel a successful business.

It might have been just with the two Troy-located companies that I worked for, but entertaining corporate visitors and putting employees into free dining/drinking situations and yet still making them responsible for executive transportation back to their hotel [[in Troy) is an irresponsible business practice.