Chains supply needed convention center-area rooms, while boutique properties bank on eclectic neighborhood south of the Back Bay.
BOSTON—Just two miles separate Boston’s Seaport District from its South End neighborhood. Yet the two areas that are home to some of the city’s most dynamic hotel development activity are much further apart when it comes to clientele, history and vibe.
Once a largely ignored area consisting of mostly parking lots, the Seaport became home to the new Boston Convention and Exhibition Center in 2004, and its hotel market has been playing catch-up ever since.
With hotels such as the 136-room Envoy (under Marriott International’s Autograph Collection), a dual-branded 510-room Aloft/Element and micro-room specialist Yotel having opened in the area since 2015, the Seaport is slated to add Hilton’s dual-branded Hampton Inn/Homewood Suites and a 294-room Hyatt Place next year, while the 1,055-room Omni Seaport, which is being built by Davis Cos., will be the state’s fourth-largest hotel when it opens in 2021.
“Boston doesn’t have enough hotel rooms for the convention center,” said Dave Johnstone, chief investment officer of hospitality of McWhinney, which is co-developing the Hyatt Place with Hyatt. “It’s an outstanding location with tremendous views of the water and airport, out towards the ocean.”
Meanwhile, tucked between Boston’s Back Bay to the north and Roxbury to the south, the South End has been better known for its mixed-bag, eclectic vibe and its “Restaurant Row” along Tremont Street than for its lodging options.
That, however is changing, as the 205-room AC Hotel Boston Downtown opened last March as part of National Development Communities’ Ink Block, the mixed-use development built at the old Boston Herald site. Bellevue, Washington-based Staypineapple took over what was the Chandler Inn last year and rebranded it as the Alise Boston, complete with renovations to all of its 56 rooms and its lobby.
Last December, longtime local developer Mount Vernon Co. opened the 177-room Revolution Hotel in a building that was previously a YWCA and a hostel. The millennials-targeting property, which will add a restaurant in July and includes its own ice cream window, is the first Northeastern U.S. property to be managed by Portland, Oregon-based boutique-hotel specialist Provenance Hotels.
“January was frighteningly quiet, and I thought, ‘What on earth have I done?’” said Mount Vernon chairman and founder Bruce Percelay, whose company owns five other New England-area hotels. “All of a sudden, it exploded. We are way ahead of our projections.”
More hotels, even more visitors
Such developers are adding inventory to a Boston market where room rates and occupancy remain higher than the U.S. average, and where revenue per available room growth has outpaced the U.S. average despite growing room supply.
Last year, Boston’s average nightly rate rose 1.6% to $199, or about 53% higher than the U.S. average, while occupancy advanced 1.7 percentage points to approximately 76%, compared to 66% for the U.S., according to STR, parent company of Hotel News Now. Meanwhile, Boston’s 2018 RevPAR rose 3.9%, compared to a 2.9% RevPAR growth rate for the country.
The city has experienced such room-demand growth despite steady development that has pushed Boston’s room supply up about 14% during the past five years to about 58,000 rooms, making the city’s hotel sector about half the size of New York’s, Chicago’s and Washington, D.C.’s, according to STR. Room supply will continue to grow because of a development pipeline of about 50 hotels totaling more than 8,400 rooms.
While inclement weather and shifting convention schedules often shake up the city’s room-demand trends, Boston’s combination of tourist attractions and business activity continues to lure visitors and hotel developers alike. Boston attracted about 22 million visitors last year, up from about 19.5 million visitors in 2017. Part of the reason for continued increases is the higher number of overseas visitors, which is the result of more direct airline routes from Boston’s Logan Airport to Middle East and Far East locales such as Istanbul, Doha, Tokyo and China, according to the Greater Boston Convention & Visitors Bureau.
New attractions in an old city
Still, much of the city’s hotel development and openings are taking place outside of—if not adjacent to—areas more traditionally associated with visitor activity. This means that, instead of heading towards downtown or financial district, visitors have the option of exploring the Seaport, where, in addition to attractions such as the 5,200-seat concert venue Rockland Trust Bank Pavilion and the Boston Tea Party Ships & Museum, a wider array of restaurants are opening up. The area’s become enough of a draw that Amazon last May signed a lease for 430,000 square feet in a Seaport building scheduled for completion in 2021.
Meanwhile, the South End is just south of a traditionally tonier Back Bay district where the iconic 1,060-room Boston Park Plaza completed its $100 million renovation in 2016 and the 356-room Revere Hotel Boston Common received a $28 million facelift the following year. As the South End continues to gentrify, its newest hotels are being positioned to be priced below the luxury and upper-upscale hotels of downtown and Back Bay, and are looking to attract a visitor more drawn to the strictly local elements and culture than to the big tourist draws like Faneuil Hall and Boston Common.
So while the AC Hotel’s and Alise’s accommodations are more traditional by hotel standards, the Revolution Hotel has taken the gamble of maintaining some of its hostel element, as about 60% of its rooms have shared bathroom and shower facilities.
Percelay, who said the property has more custom installations “than any hotel I know” because of its artwork but declined to disclose its development cost, says that gamble has paid off.
“We designed [the common bathrooms] much like a luxury spa,” he said. “It’s working so well that we’ve had people with en-suite bathrooms say they’ll go to the alternatives. We also have a lot of European and Asian travelers, and it doesn’t bother them at all.”