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By Adam Perrotta
The currently anemic state of the hospitality sector has been well documented for some time now. Doubly stung by a sharp slowdown in both business travel and tourism—as well as the financing problems that have plagued the commercial property sector as a whole—it seems clear that the sector is in the midst of one of its toughest periods ever. The struggling state of the market, though, is apparently not discouraging the owners of the Arizona Biltmore Resort & Spa from moving ahead with a planned $600 million renovation project. Also undeterred is the Phoenix City Council, which okayed the plan late last week.
That's not to say that the resort's owners—a partnership between Morgan Stanley, Pyramid Advisors, and Investment Partners—are blind to the current market realities. The renovation is largely dependent on future market and economic conditions. The only component of the overall plan that is currently on any set time schedule is the $120 million first phase, which will consist of the addition of a major new spa facility. The design of the spa will hit the drawing boards of architectural firm Gensler immediately, with groundbreaking planned for as early as late 2010.
The remainder of the renovations, however, remain in very preliminary stages. Planned additions include a new fine-dining restaurant, upgrades to pools and trails, a redesigned entrance, and 300 new rooms. Other than the spa, the rest of the projects could be a long way from actually delivering; the only timetable for the other features is for them to begin development sometime before 2030, depending on market conditions and industry demand.
And that demand is currently ebbing. Revenue per available room, or RevPAR has been on a downslope for some two years now. And that trend is expected to continue as the global economy continues to be riddled with uncertainty. According to a June report by Smith Travel Research, nationwide RevPAR is expected to sink another 17.5 percent during 2009, with an additional 3.5 percent decrease in 2010.
However, the sector's dark days won't last forever. The Smith Travel report expected a bounceback beginning after 2010, with RevPAR increasing at an average annual rate of 9.2 percent over 2011 and 2012.
—Nielsen Business Media
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Arizona Biltmore Moves Forward with $600 Million Renovation
July 7, 2009By Adam Perrotta
The currently anemic state of the hospitality sector has been well documented for some time now. Doubly stung by a sharp slowdown in both business travel and tourism—as well as the financing problems that have plagued the commercial property sector as a whole—it seems clear that the sector is in the midst of one of its toughest periods ever. The struggling state of the market, though, is apparently not discouraging the owners of the Arizona Biltmore Resort & Spa from moving ahead with a planned $600 million renovation project. Also undeterred is the Phoenix City Council, which okayed the plan late last week.
That's not to say that the resort's owners—a partnership between Morgan Stanley, Pyramid Advisors, and Investment Partners—are blind to the current market realities. The renovation is largely dependent on future market and economic conditions. The only component of the overall plan that is currently on any set time schedule is the $120 million first phase, which will consist of the addition of a major new spa facility. The design of the spa will hit the drawing boards of architectural firm Gensler immediately, with groundbreaking planned for as early as late 2010.
The remainder of the renovations, however, remain in very preliminary stages. Planned additions include a new fine-dining restaurant, upgrades to pools and trails, a redesigned entrance, and 300 new rooms. Other than the spa, the rest of the projects could be a long way from actually delivering; the only timetable for the other features is for them to begin development sometime before 2030, depending on market conditions and industry demand.
And that demand is currently ebbing. Revenue per available room, or RevPAR has been on a downslope for some two years now. And that trend is expected to continue as the global economy continues to be riddled with uncertainty. According to a June report by Smith Travel Research, nationwide RevPAR is expected to sink another 17.5 percent during 2009, with an additional 3.5 percent decrease in 2010.
However, the sector's dark days won't last forever. The Smith Travel report expected a bounceback beginning after 2010, with RevPAR increasing at an average annual rate of 9.2 percent over 2011 and 2012.
—Nielsen Business Media
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