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Tampa Bay Area
Business Observer Friday, Jan. 12, 2018 11 months ago

Twice as Nice

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To cut costs and expand guests' experience, developers throughout the Gulf Coast are delving into 'dual-branded' hotels.
by: Kevin McQuaid Commercial Real Estate Editor

When Tampa-based Liberty Group first considered the idea of developing a new hotel in its home city, market research indicated that both a new Hampton Inn and a Home2Suites would fit well with visitor demand and travel trends.

So Liberty decided to do both — on the same property in Tampa's Channel District.

Liberty Group CEO Punit Shah says combining the two Hilton Hotels Corp. brands will generate operating efficiencies and provide both choice and an expanded experience for guests.

“The reason I love dual-branded properties is there are just so many efficiencies associated with them, both in the design and the operation,” says Shah. “There's one front desk, there's one pool, and other amenities are shared. And we've found that the two different brands often appeal to two different customers.”

In addition to the 213 rooms and extended-stay suites, Liberty Group's new project will contain a Starbucks coffee shop on its ground floor. Shah says the coffee house also is likely to be among the first to sell beer and wine in Florida, under plans being formulated by the Seattle-based chain.

The $40 million hotel, which will feature a social media wall, charging stations for electronic devices, meeting space, fitness center, a rooftop outdoor swimming pool and be within walking distance of the planned $3 billion redevelopment of Water Street Tampa and Amalie Arena, is slated to open in mid-2019.

It will be Liberty Group's first new hotel developed in Tampa since 2014, when it completed the aloft Hotel downtown. The company sold the aloft property in November 2015 for $30 million. In all, the company has owned and managed 55 hotels nationwide.

Although new to the Gulf Coast, dual-branded hotels have gained in popularity nationwide as hoteliers grapple with ways to control costs, open new properties and appease increasingly sophisticated and cost-conscious consumers.

“I'm surprised they have not caught on here to the degree they have in other parts of the country,” says Kent Schwarz, an executive vice president who focuses on lodging for commercial real estate brokerage firm Colliers International, in Tampa.

“Dual-branded hotels are typically considered less than twice the risk but they provide two times the potential market. Some developers wouldn't want to build a 200-room Mainstay or Sleep Inn alone, but if you put them together, the combination works spread out over that room count.”

The Liberty Group project, for instance, will be Hilton's first dual-branded hotel built from the ground up along Florida's West Coast.

It also will become one of the first Home2Suites properties in the Tampa Bay area. Hilton says the brand “is designed for today's business and leisure traveler.” Each suite includes a fully equipped kitchen, along with living and working areas.

Hampton Inn rooms, by contrast, are typically smaller and generally intended for stays of seven nights or less.

The region's only operating dual-branded hotel has, in its first five months in operation, “exceeded expectations,” says an executive with the property's owner.

Shawn Gracey, executive vice president of hospitality for Key International, a Miami-based firm, says the dual-branded Residence Inn Tampa Clearwater Beach and SpringHill Suites Tampa Clearwater Beach have received a solid reception from the public — despite opening just a few weeks prior to Hurricane Irma, in September.

The 309 Coronado Drive hotel, in Clearwater Beach, contains 255 rooms and suites from the Marriott International chain.

Like Liberty Group's planned Hilton, Key International's hotel offers a wide variety of amenities intended to appeal to both transient and business travelers alike.

“There's an ownership side and a customer side to it,” Gracey says. “From the ownership side, in a location like Clearwater Beach, a popular coastal location, there's only so much land available. The dual brand allows us to maximize that potential. When you have two hotels in one location, you need just one sales team, a single general manager, so there's an efficiency built in to the scale.

“From the customer standpoint, we're finding that people like to have the options,” Gracey adds. “They see the value in combining the two flags under a single roof. We're looking forward to a strong 2018 there.”

And while dual-branded hotels have, perhaps naturally, been drawn to population centers in and around Tampa, the concept is beginning to be rolled out elsewhere along the Gulf Coast.

In Sarasota, Ohio-based TDR Land Holdings is constructing a six-story hotel on Fruitville Road, at the Interstate 75 interchange, that will house both a Sleep Inn and a Mainstay Suites extended-stay hotel.

David Schlabach, a TDR partner, told the Business Observer last year that “we think there are a number of good reasons why this opportunity will be attractive.”

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