Texas real estate investment company Summit Hotel Properties is adding two downtown New Orleans hotels to its growing portfolio.
The publicly-traded company, based in Austin, has acquired a dual-branded Marriott hotel located at 1600 Canal St. in a building that previously housed offices for the University of New Orleans. The company also plans to purchase a Canopy by Hilton that is expected to open this year in the former Oil & Gas Building at 1100 Tulane Ave.
The Canal Street hotel sold for $31 million earlier in January, according to Orleans Parish conveyance records. The 13-story building reopened as a hotel in 2018 after undergoing top-to-bottom renovations.
A 74-room SpringHill Suites occupies floors two through six, and a 105-room TownPlace Suites extended-stay property is on floors seven through 13. The two brands, both operated by Marriott International, share amenities including a single lobby, registration desk, breakfast area and ground-floor bar. Both are managed and operated by the same entity and staff.
A notable feature of the property, built in the 1960s, is its rooftop, which was transformed into a multi-use area overlooking Canal Street and the Caesars Superdome with an outdoor bar, exercise room and guest laundry area.
Documents filed with the city show a construction value of $15.86 million for the roughly 131,000-square-foot renovation. The purchase was recorded on Jan. 14.
“The announcement reinforces our optimism about the outlook for our business and validates our unique ability to source and pursue a broad range of capital alternatives and external growth opportunities given our strong liquidity profile, well-positioned balance sheet and overall resilient portfolio,” said Jonathan Stanner, Summit Hotel Properties’ president and CEO, in a statement.
The seller is Dallas-based hotel developer NewcrestImage, and the purchase was part of a much larger acquisition by Summit Hotel Properties of properties in NewcrestImage’s portfolio. The initial closing included 26 of the 27 hotels held by NewcrestImage, totaling 3,533 guestrooms, two parking structures and other financial incentives.
The remaining hotel to be acquired by Summit is the Canopy by Hilton when it opens in the former Oil & Gas Building. The company expects to close on the transaction in the first quarter of this year, according to a news release. The 176-room hotel will have a Cajun/Cantonese restaurant named Ginger Roux, helmed by chef Jonathan Hostetler. A meeting space with a terrace balcony was also in the development plans.
The acquisitions total $822 million and will make NewcrestImage one of the largest shareholders of Summit Hotel Properties. The dual-branded Marriott hotel and Canopy by Hilton are the only New Orleans-area hotels that are part of the purchase.
The acquisitions bring Summit’s total number of properties to 101 in multiple states. Summit also owns three other Marriott hotels in downtown New Orleans and two in Metairie that were purchased for $135 million in 2013.
The transaction follows a string of high-profile purchases in New Orleans over the past six months.
New Orleans hotelier Joe Jaeger sold the 220-room Bourbon Orleans at the corner of Bourbon and Orleans streets in July to Maryland-based investment firm DiamondRock Hospitality Company for $81 million. Jaeger sold the Whitney Hotel at 610 Poydras St. to Mississippi native Robert Thompson in December for $16.9 million. Thompson also acquired the Frenchmen Hotel for an undisclosed sum in June.
Tyler Robinson, an agent with New Orleans commercial real estate firm SVN | Urban Properties, represented Thompson in both deals. He said it’s not uncommon for owners and operators to sell a hotel property, like the dual-branded hotel, a few years after being placed into service, but Hurricane Ida slowed these deals.
Robinson said he’s seen occupancy rates for leisure travel rise in the city even with some COVID-19 mandates still in place. Leisure travel, he said, rebounds quicker after economic downturns, and he expects business travel to increase later in 2022.
“That does not go unnoticed by all the investors out there,” he said “I think the hospitality sector will stay robust, and we will see this trajectory continue this year and into next year.”
