When developers first pitched building a hotel with 400-plus rooms on Summer Street in the Seaport District, they bet that it would thrive on business from two big tourism engines nearby: the Boston Convention & Exhibition Center and the city’s cruise ship terminal, along the Black Falcon Pier.
Five years later, the $176 million Hampton Inn and Homewood Suites Seaport is finally opening, but to a radically different world. Tourism is tentative. The convention center and the cruise terminal sit dark. Even business travel is just beginning to resume.
The pillars of Boston’s once-lucrative hotel business have buckled over the last 15 months, and many people in the industry believe it will take years to rebound fully. In April, fewer than one-third of the city’s hotel rooms were booked, according to the consulting firm Pinnacle Advisory Services. And at $147 a night, the typical rate was barely at half of where it stood two years ago. A few big hotels, including the 1,200-room Sheraton Boston in the Back Bay, are still closed.
Yet across the city this summer, a wave of new or dramatically renovated hotels will open their doors.
One of the grand dames of Boston’s hotel world — the old Ritz-Carlton on Arlington Street, turned the Taj, and now rechristened the Newbury — welcomed guests back last week after a full renovation. In Post Office Square, the Langham is set to reopen next month, two-plus years after shutting its doors for a major renovation. And in the Seaport, there’s the 1,054-room Omni Boston, next to the convention center.
All of them are debuting in a hotel landscape that looks far different than what the developers and investors could have imagined when the construction began.
“In a normal world, it would be really exciting to have all these new hotels opening,” said Tim Kirwan, a longtime Boston hotel executive who now consults on projects. “Now it’s feels like ‘What are you doing?’”
They’re doing what hoteliers ― known for their optimism even during challenging times ― have always done. Executives involved in several of this summer’s debuts point out that being under construction during the pandemic had its advantages. They didn’t face wrenching decisions about layoffs or need to pivot to housing college students. They can start fresh and open gradually, with time to work out the inevitable kinks. Mike Jorgensen, managing director of the Omni, said it is finishing interior construction, starting to hire top leadership, and booking smaller group events ahead of a planned Sept. 1 opening.
“This will be the fourth hotel I have opened,” he said. “It’s probably equally the most frustrating and most rewarding thing you can do. And there’s a lot that’s out of your control, like a pandemic. The key is really just to stay the course.”
Still, the Omni is a convention center hotel, developed in large part to address a longstanding shortage of rooms near the massive hall, which tourism officials say has hampered Boston’s ability to land larger events. A few conventions are scheduled for late summer and fall, and more are on the books for 2022. But it’s an open question as to when the convention center will be humming again with any regularity.
That’s also a concern for Peter Palandjian. He’s CEO of Intercontinental Real Estate, which owns the Hampton Inn and Homewood, just a half-mile down Summer Street from the convention center. Convention traffic was projected to be an important part of the property’s business, as was business travel tied to the burgeoning office market in the outer Seaport. He’s optimistic that both will come back, eventually.
“It’s hard to see when corporate travel picks up, and when convention business picks up,” he said. “I’m of the mind that it’s human nature; people want to be together. I’m just not certain when.”
Once it does, business may look different than in pre-pandemic times.
Pinnacle vice president Sebastian Colella projects a future when people still fly for business, but less often, when conventions still happen, but they’re smaller and more focused. That will probably hurt larger business-oriented hotels — featuring big ballrooms and restaurants priced for expense-account spending — more than budget-conscious places or true luxury properties.
“There’s a lot of supply in Boston that we call upper upscale. Full-service, lots of meeting space,” Colella said. “They’ll be the ones that will be slowest to recover.”
It could take years for rates to bounce back. While this year should be better than last, Pinnacle projects it could be 2025 before the average price of a night’s stay in Boston gets back to the level of two years ago, or $261.
“If we’re looking at 2019 as the high-water mark, it’s going to be awhile,” Colella said.
That has given pause to the companies behind a few hotels that were still in the planning stages when the pandemic hit.
In February, the developers of a planned 21-story hotel at 150 Kneeland St., near South Station, asked the Boston Planning & Development Agency for approval to build condos instead, “in light of the seismic shifts in the hospitality industry.” A hotel approved for Kenmore Square is on hold, as well, at least for the time being.
But other hotels already underway — such as a 212-room Hilton begun in 2019 near Haymarket downtown and the 33-story Raffles Boston Back Bay Hotel & Residences, off Stuart Street — are still rising.
At the Langham, which closed in spring 2019 for a $150 million renovation, there certainly could have been worse times to be shuttered than last year, said general manager Michele Grosso. He’s gearing up to reopen on June 30 and is hiring staff — including some of the people who were laid off two years ago. Pre-bookings look decent, especially from weekend leisure travelers, Grosso said. He’s been watching closely as tourists have begun making their way back to downtown Boston over the past month.
That leisure travel is a priority for Paul Sacco, CEO of the Massachusetts Lodging Association. He acknowledges that it will be awhile before business and international travel are revived, but he’s hopeful that domestic tourists can fill rooms this summer, and he’s pushing for the state to boost its marketing efforts to get eager travelers to come to Massachusetts, instead of somewhere else.
“The leisure market is where it’s at, for now,” he said.
Tourism is already driving business in other cities. Grosso also oversees the Langham’s property in Chicago — a similar hotel market to Boston’s, in many ways, he said — and has been encouraged to see nightly business there improve as drive-in tourism has rebounded this spring. Improvement, however, is relative in this weird new environment for the battered hotel business.
“Just in the last few weeks it has been a dramatic change,” he said. “We’re now even hitting 30 percent on weekday nights [in Chicago]. Pre-COVID, those numbers would have awful, but right now they feel pretty great.”