As Boston’s housing market rebounds, developers are reviving stalled hotel projects

The average daily hotel rate has surpassed 2019 levels in Boston and Cambridge in the past six months, according to data from Boston-based hotel consultancy Pinnacle Advisory Group. Demand from tourists and tourists has been a key driver of the city’s hotel recovery, even as business and corporate travel has picked up steam since the spring, said Sebastian Colella, vice president of Pinnacle’s Boston office. However, leisure travel, which typically declines in Boston’s colder winter months, could take a further decline next year if the economy weakens further.

But real estate development projects take years, Colella notes, and for some developers, it makes sense to stay ahead of the curve.

“To get a project done today, I believe developers have to be incredibly creative,” he said.

Both hotel projects were approved this month by the BPDA board of directors: a 15-story, 98-room hotel at 104 Canal St. in the Bulfinch Triangle in the West End and a 12-story, 80-room building at 7-9 Hamilton Place in Downtown Crossing — it was first envisioned before the pandemic, representatives of both projects said.

Somnath Hospitality LLC plans to build a 15-story, 98-room hotel at 104 Canal St. in Boston’s Bulfinch Triangle.Stantec architecture

While there is potential for business travelers to the Hamilton Place project, its developers expect its location will be great for tourists wanting to hit the Freedom Trail, parents and friends visiting students from nearby universities of Suffolk and Emerson or anyone going to a show in the Theater District.

Developer City Realty Group has been building apartments and condos in neighborhoods throughout the city and has been scouting the 7-9 Hamilton Place development into a residential building. But they decided a hotel would be more valuable play, said Cliff Kensington, the firm’s acquisitions director, with the added benefit of bringing a rooftop bar and restaurant with an outdoor terrace to the public and beyond. a few residents on the top floor. The developer plans to rehabilitate a dilapidated three-story 1830s building and add nine floors, for a total of 80 rooms.

“A well-crafted hotel will be more profitable than even the best residential,” Kensington said. “We saw it as a good opportunity to tick a lot of different boxes.”

COVID-19 hit during the developer planning process and took a toll on the global hospitality industry. But Hamilton Place was still years away, especially given the complexity of rehabilitating a historic building in a narrow downtown spot. Yes, the hospitality industry would take a hit, City Realty reasoned, but demand for hotels wouldn’t disappear entirely, and they could plan, license and build their project during the lull.

“When we come out the other side, the hotel world isn’t going to go away,” Kensington said. “When we’re ready to go, the market will be more than there.”

Meanwhile, it’s been eight years since Woburn’s Somnath Hospitality LLC first launched a 15-story hotel at 104 Canal St. in the Bulfinch Triangle. The developer obtained BPDA approval that same year and was granted a planning permit a few months later.

It is located midway between the Government Center Garage and the TD Garden, both of which – at the time – had major developments in planning but not yet begun. Those two projects have, of course, since transformed theirs corner of the center. But 104 Canal never quite took off.

Then came the pandemic. By the time Somnath was ready to restart the hotel, his permits had expired. He has returned to the BPDA with revamped plans — swapping some larger rooms upstairs for single rooms and adding eight rooms to the overall design — and hopes to begin construction next fall.

“It has always been our intention to build there. I think it’s the best location in all of Boston. It’s right in the middle of everything,” said Vincent Cortina, representative of Somnath Hospitality. “It’s a good location for almost any type of traveller: business or leisure.”

While business travel in general has been slow to recover from the pandemic, Boston’s business travel demand has returned stronger than other cities in the Northeast, said Romy Bhojwani, director of market analytics at Boston. hospitality for CoStar Group, which studies the Boston hospitality market.

In October, demand for upscale and luxury hotels across Eastern Massachusetts Monday through Wednesday was at 95 percent of its 2019 level, compared to 85 percent recovered in New York and 79 percent in Washington, DC, they show CoStar Group data. For the month, Boston trailed only two cities — Austin, Texas and Charlotte, NC — in the recovery in demand for business travel.

“The recovery is much stronger than many other markets in the northeast and I think it will continue into 2023,” Bhojwani said. “Just given the diversity of demand generators compared to other urban markets, I think Boston will do just fine.”

However, noted Colella of Pinnacle Advisory Group, there is still a broader question about the continued demand for business and corporate travel. With many companies evaluating their back-to-office strategy and hybrid working, they may be wondering whether it is necessary to send workers on the road.

“Having people in offices is directly related to their ability to travel for work,” he said.

Catherine Carlock can be reached at Follow her on Twitter @bycathcarlock.

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