Hotel Commonwealth completes $55m expansion
How do you get hotel guests to pay $1,000 a night for a suite that overlooks the Mass. Pike?
Stuff it full of Red Sox memorabilia and promote a view of the Green Monster — well, at least the back of it.
The Fenway suite is part of a $55 million expansion and renovation of the Hotel Commonwealth in Kenmore Square. The 660-square-foot space features the #6 from the scoreboard, vintage baseball cards of Ted Williams, Bobby Doerr, Dom DiMaggio, and Johnny Pesky, and other Red Sox collectibles. The balcony affords views of Fenway, which you see while sitting in original ballpark seats.
The new wing, which opens Tuesday, adds 96 rooms and suites, 6,000 square feet of event space, including a 2,000-square-foot outdoor terrace, and 142 spaces for valet parking.
The project began in 2014, with the renovation of the 12-year-old hotel’s original 145 rooms; the lobby and meeting space were refurbished in the first half of this year.
The Boston hotel market has been strong, with room rates climbing 18 percent since 2012 and projected to rise another 8 percent next year to $275 a night, on average, according Pinnacle Advisory Group, a hotel consultancy. Boston is one of the nation’s top five hotel markets, with the city’s occupancy rates above 80 percent, compared to a projected 66 percent nationally.
In another sign of Boston’s hot market, hotels, particularly luxury properties, are selling at record prices. Hilton Worldwide, a Virginia-based chain, is seeking to buy the Mandarin Oriental in the Back Bay for $140 million, or just under $1 million a room. If the sale goes through, it would be the richest hotel purchase in Boston history on a per-room basis.
On Friday, a German investment fund paid $173.9 million — $718,595 per room — for the new Godfrey Hotel in Downtown Crossing, according to Suffolk County property records.
Last year, two other deals exceeded $700,000 per room:
Morgan Stanley bought out Blackstone Group LP’s interest in the Boston Harbor Hotel as part of a larger deal that valued the hotel at nearly $724,000 a room. And a Maryland group bought the Revere Hotel and a neighboring garage on Stuart Street for about $731,000 a room.
Matthew Arrants, executive vice president at Pinnacle, said the Hotel Commonwealth will have no trouble booking the Fenway Park suite, adding that $1,000 a night is not unheard of in Boston.
The hotel’s expansion and rates — an average of $300 a night, according to the hotel — are “a testament to how much that area has improved,” Arrants said. “When it first opened, they had BU students living there.”
Boston University built the luxury hotel in 2003 as part of a neighborhood revitalization effort. BU sold the hotel in December 2012 to Sage Hospitality, a Denver hotel management, investment, and development firm, and Fundamental Advisors LP, a New York private equity firm.
In August, Xenia Hotels & Resorts Inc., of Orlando, said it would buy the hotel for $136 million, with the deal expected to close in early 2016. Sage Hospitality will continue to manage it.
The renovation project employed 57 subcontractors, vendors, and materials suppliers, and nearly 1,000 construction workers, including plumbers, carpenters and ironworkers, the hotel said. Group One Partners served as architect, working with Columbia Construction, of North Reading, and Mortenson Construction, a Minneapolis firm, said Adam Sperling, the hotel’s general manager.
The hotel’s location near Fenway, Boston University, and the Longwood Medical Area helps drive strong demand throughout the year, Sperling said.
The hotel also is the official hotel of the Red Sox. (John Henry, principal owner of the team, also owns The Boston Globe.)
The Hotel Commonwealth has an annual occupancy rate of about 80 percent, Sperling said. With the additional rooms from the expansion, he expects the occupancy rate to decline slightly, but room rates to increase 7 percent. Overall revenue is projected to jump about 85 percent, to about $26 million in 2016, up from $14 million in 2015.