An Alpharetta developer plans to build a rare dual-branded hotel on a site at 10th and Williams streets in Midtown Atlanta. The 11-story structure will fly two Hilton flags — Hilton Garden Inn and Homewood Suites By Hilton — and be the first hotel in Atlanta built for the purpose of having two brands for two distinct customers under one roof, said S. Jay Patel, the president of North Point Hospitality Group Inc.
The Hilton Garden and Homewood Suites will have separate entrances and lobbies but share kitchen, fitness and meeting space facilities. The Hilton Garden, an upscale mid-priced hotel, will feature about 150 rooms, while the Homewood Suites will offer 110 extended-stay suites.
In terms of operations, the hotels will share sales and marketing teams in addition to its Hilton reservation system.
The Hilton Garden will target business and leisure travelers looking to stay two to three nights, and the Homewood typically serves guests that stay for five or more nights. The Hilton Garden will have a restaurant and bar and the Homewood will not.
With rising real estate and construction costs, dual-branded lodging could make mid-priced hotels feasible in densely developed areas like Midtown, Patel said.
Demand in the Midtown hotel market could not support a 260-room Hilton Garden or Homewood Suites, Patel said, and building either hotel would be cost-prohibitive at a smaller size.
“It just makes sense in an urban environment,” he said.
Mark Woodworth, the president of PKF Consulting Inc., a hotel market research firm, said developers are looking to offer unique properties that appeal to broader markets.
“Developers are finding if they can develop a property where they have one back house and two front houses, it broadens the appeal to the market and from a business prospect it’s more economical,” Woodworth said.
Buildings with two hotels under one roof are relatively rare. The Homewood family has three projects open and three more in the development pipeline nationwide, said Dawn Koenig, Homewood Suites vice president of hotel performance support.
Marriott International Inc. has long clustered multiple properties on the same block hoping to share operations costs and also is developing several dual-brand projects. In Atlanta, the downtown Wyndham and Baymont Suites hotels are a dual-use hotel converted from a former Holiday Inn.
Brad Carmony, a spokesman for Homewood Suites, said he isn’t certain the dual-brand concept is a trend, but it has distinct advantages.
“From a development perspective, it allows owners to house two brands under one roof — and the ability to maintain a balanced mix of guests,” Carmony said. “Fifty percent of Homewood Suites guests are with us for five [or more] nights, whereas Hilton Garden Inn guests don’t stay quite as long. A developer is able to gain efficiencies on real estate, staffing and shared services, all while keeping a high occupancy rate.”
Dual branding is much more common with restaurants, particularly in quick-service chains. For example, Yum! Brands Inc. (NYSE: YUM) often pairs its KFC and Pizza Hut brands.
In November 2007, North Point Hospitality Group Inc. purchased a 0.69 acre tract for $4.6 million near the Downtown Connector. The project is expected to cost $55 million, or around $210,000 per room. North Point, or one of its subsidiaries, will manage the property.
Design work should be completed within the next four to six months with construction to start in 12 months. The hotels are scheduled to open in early 2011.
Patel said there is a market for mid-priced lodging in Midtown, which has seen a rush of glitzy hotels built or proposed in the last few years. The W Atlanta Midtown opened in June, Loews Hotel Atlanta is under construction at the 12th & Midtown complex, and a Hotel Palomar Atlanta is also under construction. An InterContinental is under development at 17th and Peach-tree streets and the Chronicle has reported that Mandarin Oriental Hotel Group is eyeing Midtown.
Each of those hotels would offer rooms well north of $300 per night on average, Patel said, compared to the $150 to $200 range for Hilton Garden and Homewood Suites.
“We feel good in our positioning,” Patel said. “We don’t know of anything in the pipeline that would be a competitor to the Homewood and Hilton Garden concept.”