The Elbert Files: Why hotel developers love D.M.
Friday, September 20, 2013 7:00 AM
In case you haven’t noticed, there’s a lot of interest by hotel developers in downtown Des Moines.
Currently, four new hotels are in various stages of planning or construction, enough to rival the year 1919, when the Fort Des Moines and Savery hotels opened.
The centerpiece of today’s activity is a 450-room, four-star convention hotel backed by Bill Knapp and Jim Cownie. The Des Moines Redevelopment Co. acquired the former Allied Insurance building immediately southwest of Iowa Events Center, and it is now reviewing proposals from three developers with a selection expected next month.
Meanwhile, efforts to build three other downtown hotels are also on track.
Hawkeye Hotels of Burlington is building a 131-room Hampton Inn on the west bank of the Des Moines River south of Court Avenue. At the request of the city, Hawkeye also is building a 127-room Residence Inn and parking ramp on the same site. The Residence Inn is expected to open this fall and the Hampton Inn in the spring.
On Eleventh Street, south of Martin Luther King Jr. Parkway, Minneapolis developer George Sherman will break ground this fall for a 102-room Holiday Inn Express.
There are several reasons for the current surge of interest.
One is the scarcity of modern limited-service hotels in the downtown area.
Only two relatively recent hotels serve that market: the Suites of 800 Locust, which opened in 2001 with 51 rooms, and Hyatt Place Des Moines/Downtown, which converted seven floors of the Liberty Building at 418 Sixth Ave. into 93 guest rooms in 2010. Both operations were well-received.
It’s been more than 20 years since a major hotel was built downtown.
The Embassy Suites Hotel Des Moines Downtown opened in 1990. In the years since then, two major hotels closed. The Holiday Inn at Grays Lake went down with the 1993 flood, and the Kirkwood Hotel, a downtown landmark built in 1930, converted its 150 rooms to residential and commercial uses in 2003.
Hotel developers become interested in downtown markets when occupancy rates are high.But that’s not exactly the case in Des Moines, where current occupancy averages are below 70 percent, said Glenn Lyons, president and CEO of the Downtown Community Alliance.
The interest here is driven by other factors, he said. Of the 1,649 hotel rooms in downtown, more than 1,500 are in old-line, full-service properties. The Des Moines Marriott Downtown is the largest with 417 rooms, followed by the Holiday Inn Downtown with 251 rooms, the Hotel Fort Des Moines with 236 rooms, Embassy Suites with 234 rooms, the Renaissance Des Moines Savery Hotel with 212 rooms, and the Quality Inn & Suites Event Center with 155 rooms.
Only the Suites of 800 Locust and Hyatt Place tap the limited-service market, which the new Hampton Inn and Holiday Inn Express plan to serve, Lyons said. The niche market that the Residence Inn wants to serve is also open, he said.
The proposed convention center hotel is another matter. Local owners worry that it will draw business away from the old-line hotels, and it probably will, at least initially.
But it will also bring in a lot of new business, said Greater Des Moines Convention and Visitors Bureau President and CEO Greg Edwards. An adjacent four-star hotel will help the Events Center attract larger sporting and convention events, he said.
But the real reason more downtown hotels are needed is because recent attractions, including the Principal Riverwalk, the John and Mary Pappajohn Sculpture Park, the East Village and the Science Center of Iowa, attract more casual travelers to Des Moines.
And that will only increase after the Greater Des Moines Botanical Garden, Walnut Street, Cowles Commons and the State Historical Building are renovated.
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