How an Underperforming Best Western Became a Successful Homewood Suites
In 2010, the 64-room Best Western on Polaris Parkway in Columbus, Ohio was not performing well as evidenced by the hotel’s RevPAR Index (Revenue Per Available Room) which was well below its competitors and caused the hotel to fall into financial trouble.
From a construction standpoint, this hotel had been built like a premium-branded (i.e. Hilton and Marriott) select service product with large rooms and an upgraded exterior, although it was a Best Western, which caters to the midscale segment and price point. Since it was located near a major highway within close proximity to 4 million square feet of Class A office space and the Polaris Fashion Place--a mall containing 140 specialty shops and restaurants--we saw this as the perfect value-add investment opportunity and bought it on a short sale.
When we purchased this hotel, we chose to convert it into a Homewood Suites by Hilton, which caters to the upper upscale segment. The extended-stay market was underserved in the Polaris-area hospitality market at the time, and the reservation distribution that we would receive from being associated with the Hilton portfolio of brands appealed to us. The building layout and room size worked well with Homewood’s specs reducing the conversion time and expense from a Best Western.
It took a year to convert the former Best Western into a fully renovated Homewood Suites. In addition to converting the existing 64 rooms, we added an entirely new wing consisting of 28 rooms, bringing the total to 92. Our total cost per room with the acquisition and the renovation was 20-25% below the construction cost for a comparable Homewood Suites at the time. Moreover, we were able to run the hotel as a Best Western and produce cash flow while planning and designing the renovation.
The RevPAR of the Homewood Suites Polaris doubled that of the Best Western within the first few months of opening. In 2014, it earned Conversion of the Year for the Homewood brand of hotels from Hilton Worldwide, which is a tremendous honor. We have to say, this investment was truly worth it and represents a landmark value-add case study for our portfolio!
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