Premium content from Atlanta Business Chronicle – by Lisa R. Schoolcraft , Staff Writer
Date: Friday, March 18, 2011
Local developers are working on plans to build a new hotel in the Perimeter Center area, the first in that submarket in years.
Legacy Property Group LLC and Seven Oaks Company LLC are planning to build an upscale boutique hotel at Villa Christina at Perimeter Summit.
Villa Christina is a three-story, stacked-stone Italian villa with a restaurant, two ballrooms, two private dining rooms, an exhibition kitchen, an outdoor event pavilion and a smaller café. It is used primarily as a special events space, hosting hundreds of weddings and social functions a year.
But what it doesn’t have is a hotel.
“We were asked to concept a hotel addition,” said David Marvin, president of Legacy Property Group. “We are proceeding in a predevelopment mode to advance it to shovel-ready.”
Once built, it will be the first full-service hotel in the market in about 20 years, Marvin said.
A new hotel in the Perimeter area would bring a much needed boost to the market, said Paul Breslin, managing partner at Panther Hospitality, a hotel consulting group in Atlanta.
“That area by Villa Christina has long been a very strong corporate market,” he said.
Companies such as Cox Enterprises Inc., United Parcel Service Inc. (NYSE: UPS) and Wendy’s/Arby’s Group Inc. (NYSE: WEN) are all nearby.
“Occupancy of office space is good and getting better,” Breslin said. “That’s the demand generator [for hotels in the area]. Prospects of more Fortune 500 companies in that area are very strong.”
Other players are stepping up. Projects under way or planned in the area, Breslin said, include the renovation of Crowne Plaza Ravinia and Atlanta Marriott Perimeter Center.
InterContinental Hotels Group Plc (NYSE: IHG), which has its North American headquarters in the Perimeter area, plans to relaunch its Crowne Plaza brand like it did with its $1 billion renovation and relaunch of the Holiday Inn brand.
Host Hotels & Resorts Inc. (NYSE: HST) recently announced plans to remodel its Marriott in the Perimeter submarket.
Atlanta Marriott Perimeter Center will get a “complete repositioning of the hotel, including rooms renovation, lobby enhancements, mechanical systems upgrades, parking garage and exterior enhancements,” the hotel company announced recently. The 400-room Marriott will also add 3,400 square feet of meeting space.
There is talk of an upgrade or expansion to the W Atlanta Perimeter, Breslin said, and even a possible Hotel Indigo in the market.
The new hotel, attached to Villa Christina, would be 160 rooms and would double the size of the function space at the facility, Marvin said. Plans also include adding a spa, he added.
Seven Oaks is the developer and asset manager for Perimeter Summit, which is owned by an affiliate of the General Electric Pension Trust, advised exclusively by GE Asset Management.
Seven Oaks is working with Legacy Property Group on a financing package for the project, but has not yet gone to market with it, said Bob Voyles, principal and CEO of Seven Oaks.
Seven Oaks is also seeking rezoning from DeKalb County on the property, which will be heard March 22, he said.
“At one point, we actually changed the zoning [at Perimeter Summit] because we thought we might put condos next to the villa instead of a hotel,” Voyles said. Now Seven Oaks is seeking to go back to the zoning for a hotel, he said.
The project will move forward, depending on the rezoning and financing, “which we are confident in,” Voyles said.
Legacy Property Group is expected to manage the hotel, which will be a “branded boutique,” he said.
Marvin “is talking with a number of national groups about affiliations, but we have not made a decision [about a flag for the hotel],” Voyles said.
James Tsismanakis, executive director and CEO of the DeKalb Convention & Visitors Bureau, has heard the hotel may be flagged under Marriott International Inc.’s Autograph Collection, designed for boutique hotels, or even as a Waldorf Astoria, a brand of Hilton Worldwide.
Legacy Property Group has relationships with both Marriott (NYSE: MAR) and Hilton.
Legacy Property Group owns and operates the Glenn Hotel in downtown Atlanta, which is under the Autograph Collection flag, and the Hilton Garden Inn downtown. It also owns and operates the Embassy Suites downtown and the DoubleTree by Hilton Hotel Atlanta-Northlake near Tucker.
Marvin expects the Villa Christina project will begin construction in the fourth quarter, and then would likely open in second-quarter 2013, provided financing is finalized for the development.
There are challenges for a new hotel in the Perimeter area, Breslin said.
“The average rate [for hotels] is too low,” he said. “That’s good for the consumer, but challenging for the owner.”
There is also a low barrier to entry.
“They have to be careful that the market doesn’t get overbuilt,” he said.
But the good news for the market is that with a new property coming in, and other hotels undergoing renovation, it may have a domino effect on other properties.
“Usually when there is a renovation like that, the market will see an increase in [hotel room] rate,” Breslin said.
The lack of hotel rooms to Villa Christina’s special event space has hurt business, said Adam Ghali, general manager of the space.
“We have to turn down a lot of business because of the capacity of the villa,” he said. “We lose a big share of the market because of that.”
The hotel addition, expected to cost $35 million, will also double the green space at Villa Christina, which opened in 1993.
The new hotel gives unincorporated DeKalb County a “high-end boutique hotel with spa,” Tsismanakis said. “It will be a phenomenal new addition to what DeKalb offers and metro Atlanta offers.”