Dive Brief:
- AECOM Tishman will begin the $2 billion remodel of New York City's historic Waldorf Astoria hotel next month, according to the New York Post, a three-year project that will see the conversion of more than 1,000 rooms into condominiums.
- The hotel closed in March while awaiting an approval of the new design from the city's Landmarks Preservation Commission and to give management time to sell off unwanted interiors. The Post also reported that political turmoil had made it difficult for the hotel's Chinese owner Anbang to transfer the requisite cash for the project out of China and into the U.S.
- Hilton Hotels will manage the property and owns the Waldorf Astoria name — and the rights to license it across 29 additional hotels — but is reportedly unhappy that so many rooms will be converted into condos out of fear that it will diminish the brand.
Dive Insight:
The international luxury hotel market, according to Transparency Market Research (TMR), will hit $195.2 billion by the end of 2021 based on a compounded annual growth rate (CAGR) of 4% from 2015, as interest in luxury brands, in general, are expected to increase along with disposable income. TMR said the business segment of the market, however, will be the biggest piece of that expansion. The North American market should expand at a 5.4% CAGR during the same time period.
Hotels are often at the heart of the growing list of mixed-use projects under development in the U.S., helping to achieve a variety of income streams. This is really the strength of mixed-use projects as it has the potential to insulate the owner from a dip in one market. Mary-Claire Burick, president of the Arlington, VA-based Rosslyn Business Improvement District (BID) told Construction Dive in June of last year that a range of uses — e.g. office, retail, hotel, residential — lowers the risk for investors.
Hotels also have the potential to boost significantly a city's convention business, as long as it is amenity-rich and close — preferably walking distance — to where meetings and other activities take place. This strategy worked at the Palm Beach County Convention Center, where convention center and sports venue management company Spectra by Comcast Spectacor reported an instantaneous increase in business after building an attached 400-room Hilton. Spurred on by meeting planners who said they were more likely to book conventions and other events at a facility with an amenity-rich hotel nearby, the Oregon Convention Center in Portland is underway with construction of a 600-room Hyatt Regency.
