From Beach Town to Downtown

Several hotel developers have pounced on opportunities to build in the downtown area, where a Hampton Inn and the historic Riverside Hotel have had the market to themselves for years.

By: 

Mike Seemuth

Published date: 

Apr. 1, 2017

For most of Fort Lauderdale’s modern history, the rule has been simple: if you want to build a major hotel, you build it within earshot of crashing waves.

In a tourist town, you want your hotels where the tourists are – and here, that meant the beach. The strip between A1A and the Intracoastal, aided by the flight- and cruise-convenient 17th Street corridor, has long been the dominant area for hotels.

Until now. Now a slew of new hotels by some of the industry’s biggest brands are coming to downtown. The new hotels underscore the evolution of Fort Lauderdale from a touristy beach town to a maturing metropolis with a rich variety of visitors, including business executives and professionals doing business downtown.

Scott Berman, Miami-based leader of the hospitality and leisure group at accounting and professional services firm PricewaterhouseCoopers, says the variety of new hotels coming to the downtown area is indicative of Fort Lauderdale’s maturation as a destination for a diverse set of visitors.

“In a mature hotel market, there is a price point for every wallet,” he says. “That didn’t exist in Fort Lauderdale 10 years ago.”

Hotel growth is tied to downtown’s growth as a business center.

“The demand [for hotel rooms] has picked up in downtown Fort Lauderdale,” says Miami-based hotel consultant Scott Brush. “The downtown has built up a lot in the last few years, and there’s more going on now.” So, for new hotels, “the potential is probably pretty good as long as downtown keeps developing.”

Planned developments include everything from midrange hotels with minimal amenities to high-end luxury accommodation. The dual-branded Dalmar and Element Hotel, now under construction at 299 N. Federal Hwy., fits into the latter category. The 323-room, 25-story hotel with a rooftop bar and a sixth-floor swimming pool is scheduled to open in April 2018. The Element side of the property is an upscale extended-stay hotel, and the Dalmar side a contemporary boutique hotel. Both are part of the Marriott hotel network and reservations system.

“Everything in the Dalmar is custom …We’re going to bring some of the attributes people find in hotels in New York, L.A. and Miami to Fort Lauderdale,” says Jake Wurzak, president of Philadelphia-based Wurzak Hotel Group, which is developing the Dalmar and Element Hotel.

He says it will compete with some of the best hotels on the beach. “We’re trying to compete with the W Hotel and the Hilton,” says Wurzak, a full-time resident of Fort Lauderdale, where his company has an office. “I think that by being downtown, we put ourselves in a slightly different category, and we can appeal to a broader customer base.”

Construction of a 238-room Hyatt Centric hotel was expected to start in March, part of a larger mixed-use development called 100 Las Olas, which will include a 121-unit condominium. The developer, Palm Beach Gardens-based Kolter Group, expects a 2020 opening for the stacked hotel and condominium, which will be the tallest building in Fort Lauderdale at 495 feet.

“We believe there is a very strong corporate market,” says Scott Webb, president of Kolter’s hotel development division. Webb also says the Hyatt Centric’s location in the lively Las Olas area “has incredible value. People want to be walking distance from a hotel to great restaurants and great bars, rather than driving distance.” To qualify for the Hyatt Centric brand, a hotel location must be “an urban site with strong walkability,” he says. “That’s what they look for, destination areas, not a secondary-site location.” For example, “you’re not walking to Las Olas at night from the Hampton Inn.”

Another urban destination of sorts has been unfolding just north of the city’s central business district in Flagler Village, a magnet for residential development in recent years, and in FAT Village, a neighborhood distinguished by its art galleries and other cultural attractions.

At the same time, mass transit options in the area are set to multiply. Intercity shuttles could become easier with a planned streetcar system called the Wave. And All Aboard Florida is finishing construction of a train station at 101 NW Second Ave. for its inter-city passenger rail service, Brightline, which is scheduled to begin running in summer.

At a nearby address, 315 NW First Ave., real estate developer Dev Motwani is preparing to break ground for a 202-room hotel called Tru and Home2 Suites. He is developing the dual-branded hotel in partnership with Driftwood Hospitality Management, which will operate the hotel. The Tru and Home2 Suites brands are part of the Hilton hotel network and reservations system. Motwani, who bought the development site and two nearby lots in January 2016 for $1.9 million, plans to build a hotel that visually stands out. “Flagler Village, and FAT Village to the north, is a bit of a trendier, artsy area. So, we wanted to do something within that vibe,” he says. “We’ll break ground this summer. It probably will take 16 to 18 months to complete it.”

The finished product will feature architectural glass on a prominent corner of the hotel at First Avenue and Fourth Street. In designing the property, “we also did a kind of funky wrap around the garage, rather than having an exposed garage,” Motwani says. In addition, “we have kind of a mural wall. That’s a circular mural wall outside the parking deck that can be repurposed with different paintings and murals.”

The Tru side of the dual-branded hotel is a millennial-driven offering with smaller rooms and a large, active lobby. “The Tru lobby operates almost like a coffee shop and co-working space,” Motwani says. “It’ll have an active ground floor that will create some good pedestrian activity, but it won’t be competing with local businesses as they open up in the area.” The Tru and Home2 Suites will not have a restaurant, for example.

The Home2 Suites side of the building is an extended-stay hotel with larger rooms and small kitchen areas, targeting business travelers who stay more than a couple of nights.

When the Brightline passenger train service extends from South Florida to Central Florida, it could bring business to the hotels. “We think it will be complementary to the Brightline station that’s coming in,” Motwani says. “As you get travelers coming from Orlando, we think those will be some guests staying overnight. We will also create activity to help support businesses in the FAT Village area.”

Another mass transit asset in the making, the planned Wave streetcar system, would make other parts of Fort Lauderdale easily accessible from Flagler Village. “We’re right along the Wave route,” Motwani says. “So, we think business people coming into the downtown will want to be able to stay here and ride the Wave.”

Will the two dual-branded hotels in the development pipeline end up dueling with each other? After all, the sites of the Tru and Home2 Suites Hotel and the Dalmar and Element Hotel are about seven blocks apart. Both properties will combine a contemporary boutique hotel with an extended-stay hotel.

Motwani says his hotel will appeal to a limited-service market more than Wurzak Hotel Group’s Dalmar and Element Hotel. “They’ve got a great product and a great concept. Part of their hotel is more of a full-service hotel, with a restaurant and more amenities,” Motwani says. “So, they’ll probably be a little bit more expensive, given that they’re providing those amenities.”

Similarly, Motwani expects his downtown-area hotel to complement, not compete with, hotels on Fort Lauderdale’s beachfront. “I don’t think we’re going after the same traveler. The beach has more of a leisure traveler. We hope to get the business traveler doing business in or around downtown,” he says. “We feel that downtown has grown to the point where it can support more than just the Hampton Inn and the Riverside, which we’ve had for many years.”

Another downtown-area hotel with a limited-service format will be popping up next to the Starbucks at Federal Highway and Broward Boulevard. The developer, Lucky’s Management, is building a 108-room Fairfield Inn & Suites at 30 S Federal Hwy.

Brush, the Miami-based hotel consultant, said the wide variety of hotel development in Fort Lauderdale’s downtown area is healthy because the new hotels are aimed at many types of travelers. “There is a range of price points. The Hyatt Centric will probably have the highest price point. The Element will probably be up there, too. But you’ve got the Tru and Home2 and the Fairfield with more moderate price points,” he says. After all, “the people who visit are not all board chairmen, and they are not all construction workers.”

Brush also said the new downtown-area hotels will face entrenched competition from hotels along the 17th Street corridor just south of downtown, which have long catered to overnight travelers doing business in the central business district. “The 17th Street Causeway is where a lot of the downtown business people have stayed,” he says. “The 17th Street corridor has the [Broward County] Convention Center. It has better access to the airport. So, I think it can hold its own” in competition with the new hotels in development.

PricewaterhouseCoopers’ Berman foresees a bigger challenge for some hotels in the 17th Street corridor. “It has been viewed that 17th Street is close enough to the downtown market to serve it. It has been a successful lodging environment,” he says.

But the new hotels in the downtown area may have their biggest impact on existing hotels just south of downtown. ‘The airport/seaport corridor at 17th Street is most at risk. Some of those hotels are not on the water,” Berman says, “and they are targeting business travelers that are doing business downtown.”

He says the new batch of hotels coming to the downtown area will serve two market segments, business travelers and family members and friends of Fort Lauderdale residents.

“They’re national chains, but they’re at a midscale price point,” Berman says. “These hotels that are being developed are very simple, relatively inexpensive to construct compared to full-service product, and they’ll have many creature comforts such as high-definition television, first-class bedding, the showerhead that fluctuates.”

If the new hotels are profitable, their success will say as much about their developers as the development of downtown Fort Lauderdale as a daily activity center instead of “a Monday to Friday market,” Berman says. Despite the potential for debilitating competition, the new hotels will be “complementary to the full-service resort hotels that exist on the Intracoastal and the beach.”

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