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Strategic Hotels to Test Condo Market at Fairmont

CHICAGO-Strategic Hotels & Resorts could sell up to 78 fractional ownership, two-bedroom apartment units and 78 hotel condominiums at its Fairmont hotel beginning later this year. It also is exploring a potential mixed-use redevelopment at its InterContinental hotel on Michigan Avenue.

By Mark Ruda | Updated on November 15, 2005

CHICAGO-Even though Donald Trump is among the players in the local hotel condominium market, Strategic Hotels & Resorts sees a still untapped market, and hopes to begin selling units in at least one of its Downtown holdings before the end of the year. The REIT will test the market by attempting to sell up to 156 units at the Fairmont hotel overlooking Millennium Park as condominium and fractional ownership units.

“Our market research has indicated that despite the growing number of for-sale condominiums in the Chicago market, there may be a separate demand for fractional ownership within the context of the full-service, branded, luxury hotel format,” says president and chief executive officer Laurence S. Geller during his company’s recent earnings conference call. The test marketing at the 692-room Fairmont, which the company acquired for $158 million earlier this year, will include an equal number of condominium hotel units that will be models for new Gold rooms in the rest of the property at 200 N. Columbus Dr., and fractional ownership units that will be two-bedroom apartments.

If the test marketing is successful, Strategic Hotels & Resorts could sell up to eight entire floors under the condominium and fractional ownership concepts. “If it’s not successful, the downside is we have a great two-bedroom apartment unit to offer,” Geller says.

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