X-radisson

[Guest 97and03]

When I spoke to Rick at one of the scrimages this spring, he saud they estimated it would take 8 million to renovate the hotel buidling and that they would be tearing it down.

[GoMeanGreen1999]

When I spoke to Rick at one of the scrimages this spring, he saud they estimated it would take 8 million to renovate the hotel buidling and that they would be tearing it down.

Is he suggesting that he could build a new one for a little more than 8 million? I have no idea what it costs to build a new one.

[Guest 97and03]

Is he suggesting that he could build a new one for a little more than 8 million? I have no idea what it costs to build a new one.

I didn't mean to imply that. I believe the idea is that it isn't worth it to renovate it.

[yyz28]

You have to be willing to take a chance. Remodeling is stupid. Look to someone Like Starwood who now has Westin, Sheraton, W @ Victory, and just opened the Joule in Dallas. Even has plans for a St. Regis in Uptown. You think they aren't rolling some dice? Go in with confidence not a sense of impending failure by remodeling.

This is the same Starwood who damn near went under as (and the actual owners of most of these hotels - 90+% of hotels are not owned by Hilton, Sheraton, etc...) they overbuilt right into the hotel bust of the late 80's, and they seem to be making the same mistake again - Hotel Room inventory is on the rise as demand and ADR's are going down. Remodeling isn't always stupid... it often is the right choice. It may not be in this case, but there are plenty of remodeled hotels that were trash and are now amazing 5 star properties...

[GoMeanGreen1999]

This is the same Starwood who damn near went under as (and the actual owners of most of these hotels - 90+% of hotels are not owned by Hilton, Sheraton, etc...) they overbuilt right into the hotel bust of the late 80's, and they seem to be making the same mistake again - Hotel Room inventory is on the rise as demand and ADR's are going down. Remodeling isn't always stupid... it often is the right choice. It may not be in this case, but there are plenty of remodeled hotels that were trash and are now amazing 5 star properties...

I suppose the demand in Denton is there for an upscale or new hotel there in place of the Radisson, but I have been over to the new Holiday Inn and it is by far I think the best Hotel in Denton, and my thought was, if "this Holiday Inn is having problems, this nice and this new" what are the chances that someone is going to come here and build something as big as the current Radisson?

[Green Mean]

My family is in the lodging business and its EXTREMELY competitive! These days you have to have everything new and up to date as well as pretty top of the line to generate good revenue. I really hope this thing gets torn down and build something phenomenal and upscale.

[yyz28]

I suppose the demand in Denton is there for an upscale or new hotel there in place of the Radisson, but I have been over to the new Holiday Inn and it is by far I think the best Hotel in Denton, and my thought was, if "this Holiday Inn is having problems, this nice and this new" what are the chances that someone is going to come here and build something as big as the current Radisson?

I don't know nor am I saying it is.

The fact is, new hotel rooms are coming on line way faster than the demand for them is keeping up right now. I would expect to see a major slowdown in new hotel construction in 2009. ...any hotel I would build right now would be heavily researched and the local market would have to be ripe for it.

[hickoryhouse]

Hotel Room inventory is on the rise as demand and ADR's are going down. Remodeling isn't always stupid... it often is the right choice. It may not be in this case, but there are plenty of remodeled hotels that were trash and are now amazing 5 star properties...

Couple of things, In my opinion ADR is not the gold standard anymore, RevPAR (Revenue per Availabe Room) gives a more acurate picture of exactly what kind of flow your property is experiencing. ADR is a good indicator of how you are pushing your rate as a hotel manager but it does nothing to show what your occupancy is, which is how hotels make money. For example if I have a 100 rm property that is 35% full at a $300 rate I have a great ADR of $300 and that ADR looks great on paper but when you dig deeper you see that your RevPAR is only $105, almost 2/3 less than ADR. That is why Holiday inn's do so well, and Motel's 6 and all that, they trade ADR for occ% and RevPAR. RevPAR also lets you see how your business is doing in comparison to your Cost per Occ Room.

I'm not saying limited service is what we need, that ould be horrible, but you can have both, look at Four Seasons, Hilton, Omni, Embassy suites etc....

As far as renovation is concerned, many times these old buildings are not conducive to renovation, perhaps wireless internet is not feasable at a decent cost due to building design, location of piping and thick concrete walls drastically reduce signal strength. Perhaps the cabling for the TV is old and outdated and does not have sufficient bandwidth capabilities to sustain the demand for future HD programming in TV's or even for clear pictures on current TV's. It costs in the millions to only renovate carpets, furniture and light fixtures, then you have to add on sructural improvements and repairs and additional equipment etc... What my point is, it might not be possible to create that fantastic renovated property at this place and have it be all that is wanted of that location for a price that is acceptable. you can produce a new building, for more money, that will have longer life, be built to current specs and probably have design elements that are customizable for future evelopments in lodging technology, advancements and improved services.

my .02

[hickoryhouse]

I don't think the New Holiday Inn is having problems, the GM said that their occ was fine and that they have plenty of business. Many times hotel owners will shuffle loans around to make more capital available for future projects, just because it is being forclosed upon, or has the risk of it, doesn't mean that there is no demand for that product.

[GoMeanGreen1999]

As far as renovation is concerned, many times these old buildings are not conducive to renovation, perhaps wireless internet is not feasable at a decent cost due to building design, location of piping and thick concrete walls drastically reduce signal strength. Perhaps the cabling for the TV is old and outdated and does not have sufficient bandwidth capabilities to sustain the demand for future HD programming in TV's or even for clear pictures on current TV's. It costs in the millions to only renovate carpets, furniture and light fixtures, then you have to add on sructural improvements and repairs and additional equipment etc... What my point is, it might not be possible to create that fantastic renovated property at this place and have it be all that is wanted of that location for a price that is acceptable. you can produce a new building, for more money, that will have longer life, be built to current specs and probably have design elements that are customizable for future evelopments in lodging technology, advancements and improved services.

my .02

You definately bring up some good points that I sure had not thought of before - in the last 20+ years there have been a lot of changes just in the technology fields that have probably been significant enough to make it unfeasable to remodel the Radisson. I guess what I am wondering is, is there enough demand for a new hotel to be built on that property of the type of hotel we would like or the University would like, that a hotel chain or group will want to build there?

[yyz28]

Couple of things, In my opinion ADR is not the gold standard anymore, RevPAR (Revenue per Availabe Room) gives a more acurate picture of exactly what kind of flow your property is experiencing.

I agree, but ADR is part of the RevPAR calculation. If demand for rooms drops, occupancy drops. As occupancy drops, ADR usually begins to fall. ...when both drop, RevPAR goes into the tank.

In terms of renovation vs. new construction, new is almost always prefered unless there is a real good reason for keeping the building - but remember, renovation means different thigns depending on the particular project. Renovation may mean new carpet, paint and wallpaper - or it may mean gut the building to the shell, in which case things like HSIA, plumbing and other infrastructure issues can be addressed.

I'm not arguing for one over the other - it would be stupid for me to do so without seeing the business case - but renovation shouldn't be discounted hands down without a full study.

...in this case, I'm assuming that has been done and the right decision is being made.

[Guest 97and03]

It may be cheaper to put 2K into your old car to keep it running in the short term than it is to pay 18K for a new car.

But does it make sense in the long run? Not usually.

[DallasGreen]

This is the same Starwood who damn near went under as (and the actual owners of most of these hotels - 90+% of hotels are not owned by Hilton, Sheraton, etc...) they overbuilt right into the hotel bust of the late 80's, and they seem to be making the same mistake again - Hotel Room inventory is on the rise as demand and ADR's are going down. Remodeling isn't always stupid... it often is the right choice. It may not be in this case, but there are plenty of remodeled hotels that were trash and are now amazing 5 star properties...

I'm banking that you are wrong and just bot 400 shares of Starwood to prove it.