Detroits Hotel Doldrums

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During the last decade, even with icons like the Book and the Fort Shelby closed and the casino hotels still on the drawing boards, hotel occupancy rarely surpassed the 60 percent mark. And though there were occasional spikes of demand around special events—the city is sold out for college basketball's Final Four next month—there was never any indication that Detroit needed more rooms.

"This has always been about urban renewal and politics more than market forces," one hotel executive told me last week. "You can admire the drive and the commitment to rebuild Detroit, but there was a lot of 'If we build it, they will come,' thinking. We built. Guests haven't come."

The three casino hotels—each mandated by the terms of their gaming license, each around 400 rooms, and each opened in the last 18 months—flooded the city with new supply. The restoration of the Book Cadillac and Fort Shelby is another example of Detroit's mind over market.

The city's tallest building and the tallest hotel in the world when it opened in 1924, the 33-story neo-Renaissance Book remains a much-loved symbol of Detroit's boom times. But as a business, the 1,100-room property was always a loser. After the war, it changed owners and hotel flags frequently and finally closed in 1984. Over the next 20 years, the city, state, hotel chains, and developers all floated and abandoned restorations plans.

The $200 million project that finally started in 2006 and culminated with a headline-grabbing gala reopening party last fall converted the Book into a 455-room Westin hotel and a residential condo complex. Both projects have been lauded for their design and creative repurposing of the Book's stately shell, but the hotel has been forced to discount rooms to as low as $99 a night.

If anything, the revival of the 23-story Beaux-arts Fort Shelby was even more unlikely. It closed in 1974 and trees sprouted in the derelict building. A $90 million restoration project began in 2007 did wonders for downtown Detroit's streetscape, if not hotel occupancy. Along with 56 apartment rentals, the building now houses conference space, restaurants, and 204 hotel suites. The smallest guestroom is 600 square feet and Dunavent, the Doubletree's general manager, says weekend rates are as low as $89 a night.

"I'm proud of what we've done," she says. "If I can get you here, I know you'll have a great experience."

Detroit Marriott general manager Bob Farmery echoes Dunavent's comments. All he wants is for guests to experience his reinvigorated property. Marriott and the tower's owner, General Motors, have poured more than $150 million into the project since Marriott assumed management of the 1,300 guest rooms in 1998.

Ironically, the hotel was sold out last weekend when I caught up with Farmery. It was hosting college hockey's Final Four and another large group. And Farmery believes Detroit can wake from its lodging nightmare. He thinks the city can profit from the AIG Effect that has forced major corporations to cancel pricey meetings in eyebrow-raising resorts like Las Vegas and Hawaii.

"Our product is terrific and our rates are low," he says. "And nobody will criticize you if you hold a meeting in Detroit."

The Fine Print…
The Doubletree Guest Suites in the Fort Shelby represents the first full-service Hilton hotel in downtown Detroit in more than 30 years. The chain returned to the market in 2004 when the Ferchill Group, which also redeveloped the Book Cadillac, opened a limited-service Hilton Garden Inn in the Harmonie Park neighborhood.

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