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2 days ago
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A guide to adaptive reuse in the hotel industry
This story was originally published on Hotel Dive. To receive daily news and insights, subscribe to our free daily Hotel Dive newsletter. Adaptive reuse — the process of rehabilitating an existing building for a new purpose — is not exclusive to the hotel industry, but more hospitality brands and builders are seeking it out for its cost-savings, sustainability and design appeal. To create a hotel using this method, developers will typically convert underutilized office space or historic buildings with outdated uses — think older banks, warehouses or even jails. Many of these adaptive reuse projects crop up in major urban areas, with hotels being a viable option to preserve existing buildings' historic character while revitalizing neighborhoods or downtown spaces that aren't reaching their full potential. Hotel Dive spoke with industry experts about what adaptive reuse projects look like in hospitality today, the opportunities they present and how hotel players can navigate the challenges of redevelopment. Seizing on an 'urban trend' In the hotel industry, the most prominent reuse cases are low-occupancy office buildings and historic structures in urban centers, according to multiple experts. Adaptive reuse in the hotel sector is 'first and foremost an urban trend,' JLL Hotels & Hospitality Group Americas President Dan Peek told Hotel Dive, noting that these projects more often than not fall into upper-tier segments. Jack Paruta, hospitality leader for architecture firm Gensler's Northeast region, told Hotel Dive that cities 'have a fair amount of building stock that is either becoming outdated or outliving its use, and developers are seeing opportunities to turn those into hotels.' According to Peek and Paruta, adaptive reuse can often be a more affordable option than new construction, particularly in urban markets. The average ground-up hotel development cost per key for an urban full-service hotel climbed to $742,000 in 2023, up 32% from 2019, JLL reported last year. A 260-key hotel, for example, would total roughly $192 million to develop. On the flip side, to convert a typical vacant office building, it costs between $250 and $650 per square foot, according to CBRE data. Assuming a 200,000-square-foot office building yields 260 hotel rooms, the cost to convert that office to a hotel would total roughly $130 million on the high end of the cost range. Andrew Hartley, a director for CBRE Hotels Valuation and Advisory team, told Hotel Dive that 'relatively high interest rates and the inflationary cost of construction' following the COVID-19 pandemic have made converting an existing building into a hotel more desirable than building one from the ground up. A high-cost construction environment is 'the genesis of why a lot of hotel developers are looking at adaptive reuse as an option, because the development space is very challenging,' he added. Optimizing 'distressed' spaces Meanwhile, an increase in remote work is leading to office vacancy nationwide, Hartley noted. Following an early pandemic exodus from in-person work, office occupancy has not recovered. According to CBRE data, U.S. office vacancy stood at 19.8% at the end of 2024, up from 12.4% in the first quarter of 2019. Additionally, many large cities across the country have seen a 'permanent erosion of corporate travel,' Hartley said. Office buildings with low and declining occupancy that are considered 'distressed' are often the target of hotel conversions, Paruta explained. In many central business districts, older and smaller office buildings have been hit the hardest by occupancy dips, per a June Gensler report. While hotels are helping fill office vacancies, not all adaptive reuse projects include the full transformation of an existing building, the experts shared. In some cases, a hotel may occupy several floors of an office building that maintains partial occupancy, or a hotel may complement a residential use. Aspen Hospitality and New York-based real estate developer Tishman Speyer, for example, are working to convert 10 floors of vacant office space above the NBC 'Today' show studios at Rockefeller Center in New York City into a 130-room luxury hotel. Meanwhile, residential hospitality operator Mint House converted a former 11-story office building in Washington, D.C., into the boutique apartment-style hotel 1010 Vermont. And other apartment-style hotel operators have opened hotels within multifamily buildings. 'Preserving what already exists' Preserving existing building supply is also a sustainable practice. Through adaptive reuse, developers can minimize the carbon associated with building properties, including material extraction, manufacturing, transportation and construction, according to Paruta. Adaptive reuse can be used as a strategy to 'significantly reduce demolition, carbon emissions, waste, and preserve what already exists,' he wrote in a 2023 report. 'By transforming outdated buildings into viable new uses, we can convert properties that were once detractors into thriving contributors that align with the desired user experiences of today's age,' Paruta wrote. 'Adaptive reuse is an important strategy to preserve the past and bring back to life important pieces of the fabric of our cities and anchors of their neighborhoods.' Hotel Marcel near downtown New Haven, Connecticut, is one adaptive reuse hotel project that has taken sustainability to a whole new level. Owner Bruce Becker transformed the 50-year-old office building into the first Passive House-certified hotel in the U.S. Not only did Becker preserve the 'embodied carbon' of the existing building's concrete, steel and other materials, he also claims to have created the country's first zero-emissions hotel. Telling a story 'deeply rooted in place' Historic buildings that have outlived their previous uses are particularly desirable for hotel conversion because they present the unique opportunity to tell a story and immerse a guest into a destination, experts shared. 'The largest trend in hospitality is that people want authentic spaces.' Lori Mukoyama Global hospitality leader and design director at Gensler What's more, converting an underutilized historic building into a hotel can help drive new business as today's travelers seek more unique and immersive accommodations. According to Lori Mukoyama, global hospitality leader and design director at Gensler, adaptive reuse can create more value for guests because historic buildings often allow for the creation of unique rooms and layouts. With historic reuse, a developer can often 'get a larger room than [they] typically would with new construction,' because of the original building's unique floor plate, Mukoyama told Hotel Dive. With larger guest rooms, hotels can offer 'something really unique' — like a five-fixture bathroom, for example — because they have additional space, she noted. Historic reuse projects also showcase unique building features like tall ceilings, double-hung windows or exposed brick walls, all of which add value, the Gensler pros shared. With this built-in character, a 'four-star boutique hotel in an adaptive reused historic building is going to have a better rate than, say, a new-build Marriott or Hilton hotel,' according to Paruta, because it provides a 'higher level of authenticity of design.' Hotel developers can go one step further by incorporating the building's historic use into its theme or guest offerings, according to Mukoyama. 'The largest trend in hospitality is that people want authentic spaces,' Mukoyama said. 'If I'm going to Los Angeles versus New York or Chicago, I want to feel like I'm in that place, [and there's] no better way to do that than to tell a very authentic, historic story deeply rooted in place.' Gensler did this with Watermark Baton Rouge, when the firm helped convert a former skyscraper in Baton Rouge, Louisiana, into a boutique hotel under Marriott's Autograph Collection, Mukoyama shared. To maintain the building's history — formerly the Louisiana National Bank in 1925 and then the State Office Building in the 1960s — the hotel's design incorporates several original elements, including eight bas-relief murals, a sculpted marble entry staircase and eight Greek Revival fluted columns, into the contemporary design, according to the firm. 'Instead of having to pretend or create art that felt authentic, we used the actual artwork from the [original] bank lobby, which created a draw but also a sense of authenticity and community that you can't purchase or replicate,' Mukoyama said about the project. Combatting 'unforeseen contingencies and costs' While adaptive reuse projects have the potential to drive value for hotels, they also present challenges. It can often be difficult to reconfigure a building's floor plate to fit a hotel use, Paruta said, noting that it can be 'like a puzzle to put together room layouts that work with existing column grids or building cores.' CBRE's Hartley echoed a similar sentiment, joking that 'offices just weren't designed to have a bathroom every 200 square feet.' There is 'also a whole staff procession that you have to consider,' Mukoyama said, noting that hotel workers often use back-of-house entryways or different elevators than guests to move around a property. When changing the use of an existing building, these hotel-specific elements can be a challenge to create, she said. Hotel reuse projects must also consider loading docks — necessary for workers servicing a hotel — and space at the front entrance for guests to pull up and unload their luggage or for valet, per Mukoyama. Tough reconfigurations can be costly — as can maintaining modern building standards, Hartley noted. 'Historical adaptive reuse [has] almost always [been] much more costly than ground-up development, mainly because you have to maintain certain standards. So, there's a lot of unforeseen contingencies and costs that you have to adapt for,' he said. To mitigate costs, hotel players should consider the tax credits they qualify for when starting a reuse project, experts shared. Historic buildings can be eligible for federal and, sometimes, state historic tax credits, Paruta explained, 'which can represent millions of dollars depending on the overall budget for the project.' Approval through the State Historic Preservation Office and the National Park Service, though, is contingent on property-specific details and requires 'a rigorous process,' Paruta said. However, gaining approval for historic tax credits is 'worth developers' time, effort and money because they pay off,' Paruta said, adding that 'tax credit incentives are part of what makes [reuse] projects pencil out.' The Kimpton Gray Hotel in Chicago, for example, is a historic landmark that Gensler helped convert into a four-star, 293-key boutique hotel. The project required 'intense exterior restoration, structural reconfiguration and interior repairs,' according to the firm's website. Gensler had to preserve the existing structure to accommodate the stringent requirements of the local landmark commission. But, in the end, the preservation efforts for the project earned Gensler's client nearly $10 million in historic tax credits. Hartley explained that even though adaptive reuse hotel projects can be pricey, 'there's a lot of intangible value to potential strategies of historic restoration' for developers. Namely, it will ensure future opportunities, he noted. If a hotel developer is successful in completing a historic restoration project — which is 'exponentially harder' to do compared to ground-up development, per Hartley — the opportunity for them to do another reuse project increases. Municipalities are more likely to provide further monetary incentives, and banks more friendly with lending, to hotel developers that have proven themselves. As travelers increasingly seek unique accommodations and building supply continues to age, hotel players are sure to find more opportunities to undertake adaptive reuse projects and grow their portfolios.
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2 days ago
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US hotel room construction hits 20-quarter low: CoStar
This story was originally published on Hotel Dive. To receive daily news and insights, subscribe to our free daily Hotel Dive newsletter. Dive Brief: The volume of U.S. hotel rooms under construction decreased year over year for a sixth consecutive month in June, according to new CoStar data. As of last month, there were 138,922 U.S. hotel rooms under construction, a 20-quarter low, according to Isaac Collazo, senior director of analytics at CoStar subsidiary STR. The volume of rooms under construction decreased 11.9% year over year in June, per CoStar. The continued decline is not surprising given 'hotel demand trending downward, unrelenting economic uncertainty and rising construction costs,' Collazo said. Most of the rooms under construction are in the upscale and upper upscale segments, which STR previously forecasted would see the highest RevPAR growth this year, driven by changing traveler behavior. Dive Insight: The volume of U.S. hotel rooms under construction has decreased each month since January, coinciding with President Donald Trump's second term. In those months, U.S. government actions have caused economic uncertainty, and tariffs have negatively impacted construction pipelines. The volume of U.S. hotel rooms in final planning (266,276 rooms) also decreased year over year in June, albeit only by 0.1%, according to CoStar. The number of U.S. hotel rooms in the planning stage (349,802 rooms), meanwhile, increased 4.8% year over year in the month. The majority of rooms in the U.S. hotel construction pipeline are in these two planning phases, but 'many will likely not be built in the near future,' Collazo said. Of rooms currently under construction, the majority are in the upscale and upper upscale segments, according to Collazo, who also noted that more than half of all rooms under development are in the South, largely outside of the top 25 markets. Higher-tier hotel segments were a bright spot for the industry last year, driving performance as high-income households prioritized travel. That trend has continued, with high-income households anticipated to make up nearly half of travelers this summer, Deloitte reported in May. Ahead of this year's Memorial Day weekend, travel outlooks appeared mostly stable despite a dip in consumer confidence and dampening international visitation. Last month, however, CoStar and Tourism Economics downgraded their 2025 and 2026 growth projections for U.S. hotel top-line performance metrics, citing elevated macroeconomic concerns. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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5 days ago
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Wyndham, Grubhub partner on food delivery to 6K hotels
This story was originally published on Hotel Dive. To receive daily news and insights, subscribe to our free daily Hotel Dive newsletter. Dive Brief: Wyndham Hotels & Resorts has partnered with Grubhub to offer guests across its entire U.S. portfolio — nearly 6,000 hotels spanning 20 brands — food and convenience item delivery through online ordering, the hotel company announced Thursday. Wyndham guests can order through a branded digital experience on the Grubhub app while on-site at participating hotels. Guests will also be able to activate a complimentary six-month Grubhub+ membership, unlocking added benefits like free delivery. The partnership aims to provide guests with added convenience and comfort, according to Charmaine Taylor, senior vice president of strategic and financial partnerships at Wyndham. Wyndham joins a list of other hotel companies to work with Grubhub. Dive Insight: Through the partnership, guests at participating Wyndham hotels will be able to order for delivery food and convenience items — think toothpaste or a phone charger — by opening the Grubhub app or scanning one of the Grubhub QR codes featured on hotel marketing materials. In addition to online ordering, guests will be able to access exclusive perks like $0 delivery on eligible orders, lower service fees and a 5% credit back on pickup orders, according to Wyndham. 'Together, we're elevating the on-property experience, delivering seamless convenience for not only the hundreds of thousands of guests that walk through their doors every year, but also the tens of thousands of hotel team members who make those hotel stays possible,' Grubhub VP Rob DelaCruz said in a statement, noting that Wyndham has one of the largest footprints of any major hotel company in the U.S. The partnership will expand Grubhub's services to some 6,000 hotels — more than the company's previous collaborations with Choice Hotels International and Hilton, which brought online ordering to more than 500 hotels and 2,600 hotels, respectively. Grubhub also previously partnered with Extended Stay America, My Place Hotels of America and Sonesta after Americans became more accustomed with food delivery during the pandemic. Wyndham's Grubhub collab comes after the hotel company partnered with Applebee's in May to enable Wyndham Rewards members to earn loyalty points and receive free delivery through mobile orders with the restaurant chain. Brand partnerships drove a surge in hotel loyalty membership at Wyndham and key competitors in 2024, CBRE reported in April.
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7 days ago
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Marriott CFO Leeny Oberg to exit, 2 successors named
This story was originally published on Hotel Dive. To receive daily news and insights, subscribe to our free daily Hotel Dive newsletter. Marriott International Chief Financial Officer and Executive Vice President of Development Leeny Oberg will depart the hotel company after 26 years, Marriott announced Monday. Oberg will retire March 31, 2026. Marriott veterans Jen Mason and Shawn Hill will succeed her, taking on the roles of CFO and chief development officer, respectively. Oberg departs Marriott after serving as CFO since 2016. In February 2023, she was additionally tapped to lead the company's global lodging portfolio. Prior to her current roles, Oberg held the title of CFO for The Ritz-Carlton Hotel Company. Since joining Marriott as part of its investor relations group in 1999, Oberg has held multiple financial leadership positions. Since Oberg became CFO in 2016, Marriott has seen a 'significant increase in shareholder value, with the stock meaningfully outperforming the S&P 500,' Chairman Emeritus J.W. Marriott Jr. said in a statement. CEO Anthony Capuano said that Oberg's 'focus on value creation is evident in everything she does,' whether that be 'navigating the pandemic successfully, enhancing the company's cost competitiveness or having a disciplined and strategic approach to investing in growth.' Oberg created 'a deep bench of talented leaders who are ready to take the next steps on the exceptional path she has helped carve for Marriott,' Capuano added. Mason, a 33-year Marriott veteran, will assume the role of CFO once Oberg steps down next spring. Mason currently serves as Marriott's global officer, treasurer and risk management, overseeing global capital market activities and hotel financing; financial strategy and capital allocation; financial risk management and global capital transactions; and treasury services, per the company. Mason previously served as Marriott's CFO for the U.S. and Canada, according to her LinkedIn profile. Marriott has also named Hill as CDO, effective Jan. 1, 2026. He will initially report to Oberg and later to Capuano. Hill has worked at Marriott for nearly 28 years and is currently CDO for the company's Asia Pacific Excluding China region. 'While it's never easy to leave a company and job you love, I have the utmost confidence in the leaders who will assume these roles and am very optimistic about the strategic path Marriott is on,' Oberg said in a statement. The news of Oberg's exit comes several months after Marriott made several key executive leadership changes on the heels of a broader organizational restructuring that resulted in more than 800 corporate layoffs across the company.
Yahoo
15-07-2025
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HHM Hotels restructures leadership team
This story was originally published on Hotel Dive. To receive daily news and insights, subscribe to our free daily Hotel Dive newsletter. HHM Hotels restructured its leadership team through promotions and appointments across its operations and commercial divisions, the Philadelphia-based hospitality management firm announced Friday. The firm's portfolio will now be overseen by a 'stable and growing' group of executive vice presidents, and the firm has also grown its commercial team through appointments and promotions in recent months, according to the firm. The realignment is designed to accelerate the company's performance and boost scalable growth in the U.S. and Canada, HHM shared. The company currently has a portfolio of more than 235 full- and select-service hotels spanning Marriott International, Hilton, Hyatt Hotels and IHG Hotels & Resorts brands. As part of the leadership restructuring, HHM promoted Cathy O'Brien, Hiram Negron and Doug Wilkins to executive vice presidents of operations, joining Ray Perez in the role. The firm also hired Marsha Ray to join as executive vice president and head of Canadian operations. Meanwhile, the company has grown its commercial team in recent months, following Raul Moronta joining as chief revenue officer late last year, per HHM. Lindsey Johnson was also promoted to senior vice president and head of sales. The company is now unifying its revenue management, distribution, marketing and e-commerce efforts, HHM shared. 'This new structure for our operating company allows us to act faster, provide deeper support to our on-property teams, and maximize performance in every segment and market,' Dani Elhachem, the company's chief operating officer, said in a statement. HHM launched a luxury lifestyle division in 2023. The company did not immediately respond to a Hotel Dive request for further comment. Early last year, hotel management firm Aimbridge Hospitality announced a restructuring designed to streamline U.S. operations. Since then, the firm has appointed a new CFO, chief global growth officer and board of managers. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
