Omni to spend $8 million downtown

[thelakelander]

Omni is planning a massive revamp of their downtown hotel. Work should start later this year.

But he also knows that Texas-based Omni Hotels & Resorts is committed to the property, and is preparing to invest close to $8 million in it, between a $1.5 million renovation of the hotel's bar and restaurant, upgrades to all 354 hotel rooms and work on the elevators and other infrastructure.

Construction on the restaurant will begin in December; the other work will be completed throughout 2014, with a model of the new guest rooms on display by the end of the first quarter of 2014.

full article: http://www.bizjournals.com/jacksonville/news/2013/10/01/new-gm-takes-helm-at-downtown-omni-as.html

[Non-RedNeck Westsider]

Direct, covered access to the Central Station would be nice. 

Would be better if there were more actual plans for an extension into the soon-to-be Brooklyn Commercial district.

[tufsu1]

Omni nationally is in serious expandion mode.  They just took over 4 or 5 pretty well known resorts

[Josh]

Weren't the bar and restaurant supposed to have been remodeled this past summer?

[ronchamblin]

This is encouraging, and is a signal that "somebody" is cultivating a little optimism for the core..... somebody is actually investing in the core..... not letting it down....or just talking.

Go Omni.

[simms3]

I hate to sound negative here, but I don't think this can be seen as necessarily an "investment" in downtown Jax.  This is basically 5-8-10 year "maintenance" for all operating hotels, and is a standard amount for this size hotel (given their number of rooms).  According to Omni, they have 354 guest rooms and 44 "villas" with 2-3 BRs.  Just using their total # rooms of 398, that's about $20K/room.  What makes this significant is that no hotels in DT Jax trade hands for more than $100K/key, so this could essentially be 20+% of the "sell-price", a much lower margin than would be typical.  They are basically refreshing the hotel in a standard amount despite likely low F&B business with Juliette's (huge operation and lots of seats, always empty when I'm in there) and low occupancy and daily rates (trending with all DT Jax hotels).  The owners could "sell the vision" to a new owner, who would essentially put the same capital into it.  It's likely that because it's DT Jax neither the operator nor the building owner (Omni for both?) can sell right now, so they're on the hook the hotel refresh.

In another market, these renovations would be done for the same reasons (have to stay competitive, keep up with trends, boost marketing effort, replace failed business segments, keep loyal customers happy, etc), but likely their occupancy would be a good bit higher and their rates would be much higher.  A similar sized hotel in DT Nashville just got north of $300K/key, easily 3x as much as anything in DT Jax.  These same renovations at that hotel would be less of a heartburn.

They spent $87mm on Amelia Island Plantation when they purchased it and completed a $5mm reno of the DT hotel in Jan-05 (8 years ago).  Crowne Plaza completed an $11mm reno when they reflagged the Holiday Inn Airport (317 rooms).

[Lunican]

It's mentioned as an afterthought in the article, but 'work on the elevators' could be several million dollars leaving very little for the guest rooms after $1.5 million goes to the bar. At least they aren't letting the place fall into the ground. That's a plus!

[goldy21]

The Hyatt is long overdue for a renovation as well.

[simms3]

It's mentioned as an afterthought in the article, but 'work on the elevators' could be several million dollars leaving very little for the guest rooms after $1.5 million goes to the bar. At least they aren't letting the place fall into the ground. That's a plus!

This is true...$8mm is a pretty small amount, though it can be enough to make for a new lobby/restaurant if little needs to be done to building systems and rooms.  In this case, if elevators are being modernized and cabs replaced, that alone could be $2mm++, $1.5mm for the bar, leaving $4.5mm for a restaurant and lobby and rooms, which is not much depending on the scope of the work they want to do.  Thankfully Juliette's is incorporated into the lobby/atrium, so I doubt it's as expensive as would be typically to totally rebrand a hotel restaurant.  However, we just spent more than this on the lobby renovation of an office building I work on (a small office building of only 200,000 SF), granted it's basically a whole new lobby.  Have to leave a mil or two for the rooms if they are to be renovated/upgraded with new fixtures.

[simms3]

However, we just spent more than this on the lobby renovation of an office building I work on (a small office building of only 200,000 SF), granted it's basically a whole new lobby.

I just realized I've made the point before that LLs have no reason to spend money on their DT Jax buildings, yet I'm pointing out an example of my company spending over $4.5mm on a lobby for a 200,000 SF office building and Omni is obvi spending $8mm on their mid-size hotel.  (we're actually spending over $16mm when all is said and done on lobby, elevators, TIs, exterior, and other things, basically for one prominent tenant who has an executed LOI out with us)

Our average effective rents in the building we are working on (100% occcupied now, will be 100% occupied through 2025, in SF) are going to be about $58 gross with 3% ann escalations when all work is done (and this is class B in a non financial district submarket).  Jax is more like $20 gross and stagnant even in its best class A towers right DT.

Admittedly I'm virtually green to hotels, but I do know that they are basically a perpetually revolving marketing strategy and $$$s are part of that, especially in competitive markets.  I would think Jax is a surprisingly very competitive market because there are so few visitors and too many rooms...so it's almost the worst possible market to be a hotel owner/operator in, but for those that are stuck it requires some money to theoretically salvage the investment.  If it were office/retail, little work would be done (I would think) and it would just float like every other building DT until the city can somehow create a natural "market" or incentive for LLs to do something.