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Under-demolished or overbuilt?

I saw a wonderful sight last week, one which is all too rare: a 1970s-era full-service hotel being torn down to be replaced on the same site with a 21st century property under the same brand. Hooray!

If Smith Travel Research tracks the number of hotels and rooms closed each year rather than “repositioned” (and I believe it does), I wish it would publicize that data more. Perhaps we could give an annual “Demolition of the Year” award at the investment conferences.

The boutique segment of the industry has given new life to many older urban properties, and this is great. Most of the time they are being taken “up market” from their geriatric former offerings.

But obsolescence is still a drag on our industry, with far too few properties being removed from the supply. Having been around long enough to have attended the grand openings of a lot of suburban full-service hotels that are now beyond their useful lives (which were claimed to be about 30 years when they were built), I wonder why they don’t go away.

Actually, I know why, and you do too. They still have some value to some investors.

The International Society of Hospitality Consultants (ISHC) took on this issue over 20 years ago, yet it remains a problem and is getting worse now that new development is starting up again.

What is the answer? I suppose it’s some kind of financial incentive for adapting obsolete hotels to other uses. The ISHC identified a few of these, such as senior housing, public housing for short-term displaced families, mini-storage and such. But it would be a good thing if the bright young people in our industry shined a new light on this issue and came up with more ideas.

And perhaps building in some alternative use at the front end would be a cool challenge to the design teams and make the lenders and investors feel more secure. 

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