Get Ready For More James And Affinia Hotels, Supposedly
Another day, another dollar. Yesterday, a real estate investment trust called Pebblebrook helped out the Denihan Hospitality Group, (Affinia, James, The Benjamin, The Surrey) by pumping some mega bucks ($910 million to be exact) into six of the Denihan properties. The Benjamin, Affinia Manhattan, , Affinia Shelbourne, , Affinia Dumont, Affinia 50, and Affinia Gardens are now half-owned by Pebblebrook, who inherited not just a fancy collection of classic New York buildings, but also a half portion of the hotels' collective debt (around $600 million, or $100 million per hotel). Holy bricks of gold, batman, that's a lot of money! But we have to assume these guys know what they're doing.
Since opening in 2009, Pebblebrook has spent $1.6 billion buying up hotels like Miami's Viceroy and San Francisco's Sir Francis Drake. And it seems they're just getting warmed up. Meanwhile, Denihan, now with some extra change in their pockets, is expressing interest in expanding two of their brands (James and Affinia) into areas outside New York, Chicago, Washington and Miami at the rate of two hotels per year. Strong words. But are they being realistic?
We've heard about the James folks wanting to expand for a while now. And certainly, they've had success with the James New York. It's too early to say for the James Miami. But looking outside those major metropolitan areas (which is exactly what they want to do), they may have trouble finding their "voice." If all we have to look forward to is a repeat performance of Scotsdale, AZ, then we probably shouldn't get our hopes up.
The Wall Street Journal makes it clear that the numbers aren't exactly in favor of New York City hoteliers:
"Yet there are concerns for Manhattan hotels. The market's occupancy rates have receded lately after a sharp rise from 2009 to 2010, much due to the many new hotels opened in Manhattan this year and last, siphoning guests from older rivals."
Which puts them both in an awkward position. The James, who has no interest in expanding within New York, still hasn't proven themselves outside New York or Chicago. And Pebblebrook, who undoubtedly hopes to make good on its near-$1 billion investment, has to rely on the five Affinias and The Benjamin to keep up with all that flashy hotel "siphon"-ing going on downtown.
[Photo: The Benjamin]