Hartford Business Journal

20 HARTFORDBUSINESS.COM | JUNE 24, 2024 Gary Desai, of Berlin-based Lotus Hospitality, opened a new extended-stay Homes2 Suites hotel in East Haven. CONTRIBUTED PHOTO Lodging Rebound As CT's hotel market recovers from pandemic, new development pipeline grows; aging properties face re-think RMS, Salvatore said, is planning a multimillion-dollar renovation to the Goodwin Hotel, located in downtown Hartford, that should begin within a year. It will mostly involve cosmetic and redecorating work, he said. Most hotels are refreshed or remodeled about every seven years, experts said. Recovery trajectory The hotel and hospitality industry has gradually recovered from the pandemic. The statewide hotel occupancy rate in pre-COVID 2019 was 61.2%, but plummeted to 37.7% in 2020, according to CoStar. The occupancy rate has climbed back since then, reaching 59.9% in 2023. Meantime, revenues Connecticut hotels generate per available room — another key financial metric — are exceeding pre-pandemic levels, reaching $86.36 in 2023, up 6.8% from a year earlier and 18.5% from 2019, according to CoStar. For the Hartford market, hotel occupan- cies reached 62.2% last year compared to 62.8% in 2019, while revenues per available room have more than fully recovered to $81.98 in 2023 vs. $72 in 2019, CoStar data shows. Leisure travel is contributing to the boost in hospitality figures, said Robert Murdock, president of the Connecticut Convention and Sports Bureau, also known as CTMeetings. The state-funded bureau was estab- lished to help recruit meetings, events and trade shows to Connecticut. Murdock said sports tourism is a major driver for the state's hospitality industry. This year marked the return of USA Gymnastics to the XL Center, an event that was canceled during the pandemic. Murdock said he hopes it becomes a regular biennial event for Hartford. Connecticut will also host Premier Lacrosse League matches at Fairfield University, and the USA BMX New England Nationals in Trumbull, both scheduled for July. Murdock said Hartford has a shortage of hotel rooms when major events occur at large venues like the XL and Connecticut Convention centers, Rentschler Field or Dunkin' Park. Inquiries to the bureau for meetings and events venues, with or without lodging, are up to their highest levels in 11 years, he said. The bureau reported 684 inquiries in the 2022-23 season, up from 255 inquiries in 2020-21, Murdock said. The bureau has received 611 inqui- By Hanna Snyder Gambini hgambini@hartfordbusiness.com C onnecticut's hotel and hospi- tality industry was one of the sectors hit hardest by the pandemic, but it's slowly returning to pre-COVID levels, kick-starting demand for new hotel construction, industry experts said. Meantime, operators and devel- opers are working to find new uses for large-scale, traditional hotels that have become obsolete, while there's a greater focus on alternative offerings such as extended-stay and boutique-style lodging. Gary Desai, president of Berlin- based hotel management and development company Lotus Hospi- tality, opened a new extended-stay Homes2 Suites hotel in East Haven last month, the first of that brand to debut in the state, he said. A few weeks later, another new Homes2 Suites, under separate ownership, opened in Bristol. More than 30 hotels, ranging in size from six to 550 rooms, are in the development pipeline for Connecticut, according to commercial real estate data provider CoStar. If they all get built, it would add more than 3,600 rooms to the market over the coming years. Among the newest projects to be announced is a 135-room Residence Inn by Marriott, which will be located in Bridgeport's Steelpointe Harbor development. Construction on that hotel, being led by a partnership between True North Hotel Group Inc. and Bridgeport Landing Development, is slated to begin next year. 'Built for different times' Lotus Hospitality's new Homes2 Suites, at 30 Frontage Road, features 103 suites and meeting space, on the East Haven line, about a 10-minute drive to downtown New Haven, Yale Univer- sity and Yale New Haven Hospital. The project had been in the works since 2018, but the pandemic delayed its start. Desai said he's bullish about the new property because New Haven's burgeoning biotech industry, Yale University and many construction projects in and around the Elm City have driven up demand for extended-stay lodging. "They are unique in that they provide suites for leisure and business travel, for an overnight or extended stay, and we're also pet friendly," he said. New Haven has been underserved in the extended-stay hotel market, said Ginny Kozlowski, executive director of the Connecticut Lodging Association and New Haven's Economic Development Commission. Meanwhile, Kozlo- wski said she gets calls from devel- opers looking at hotel properties, but with an eye toward residential conversion. Randy Salvatore, of Stam- ford-based developer RMS Cos., recently converted roughly half the rooms on the top floors of the Hartford Hilton hotel on Trumbull Street into apartments. The building's bottom floors are now home to a DoubleTree by Hilton Hartford hotel, which has 170 guest rooms. The former Hilton hotel, which strug- gled financially for years, especially during the pandemic, had 393 guest rooms and was in need of an upgrade. Large-scale and aging traditional hotels "were built for different times," Salvatore said, prompting developers to find creative ways to repurpose the spaces. Higher construction costs and interest rates have made those conversions more difficult over the last year or so, but Salvatore said the market is shifting away from larger hotels with vast banquet halls in favor of smaller, boutique-style hotels with higher-end finishes and more modern amenities. Larger hotels built in the 1970s and 1980s require a lot of capital to operate, Salvatore said, and can cost "tens of millions to just update." It's more economical to update smaller properties, he said. In addition to being an apartment developer, RMS operates several boutique hotels, including the Blake in New Haven; the Lloyd in Stamford; the Goodwin in Hartford; Hotel Zero Degrees in Danbury; and the Water- shed in Norwalk. Ginny Kozlowski Randy Salvatore Robert Murdock

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