DALLAS-The $50 million sale of the 407-unit Westin City Center is proof that investors are increasingly confident about the future performance of upscale luxury hotels located here, according to Bert Stevens, a first vice president with CBRE’s Hotel Partners division.
“This is one of the largest transactions in Dallas in the past three years,” Stevens tells GlobeSt. “It signifies an improving market. Dallas has been one of the top two markets in the nation in terms of revenue gains in the last two quarters. During the second quarter, Dallas had revenue gain of 7.3% with higher priced hotel leading the gain.”
Stevens expects the sector to show even more improvement since supply has dwindled substantially. “On the construction side, the only property that is similar is the convention center hotel,” he notes.
Inland American Real Estate Trust Inc. acquired the Westin City Center from Chicago-based LaSalle Hotel Properties, paying roughly $122,000 per room. “That number is below replacement cost, but it’s in line with what other properties are trading for across the nation,” Stevens says.
Stevens notes Dallas hotel properties have not traded at premium pricing historically. “The Dallas market has been fairly stable, with no real lows or highs, and pricing is based off that stability,” he explains.
Stevens contends the Westin City Center trade indicates that investment sales activity in the hospitality sector is ramping up, both locally and nationally. Activity in Dallas over the past six months has been slow: according to Real Capital Analytics, only four hotel properties have traded (above $5 million) for a total of $84 million.
As part of Oak Brook, IL-based Inland American’s portfolio, the Westin City Center has been reflagged as a Marriott property and renamed Dallas Marriott City Center. Located on the edge of the nation's largest urban arts district at 650 North Pearl St., theAAA-4-Diamond hotel is connected to the Plaza of the Americas, a mixed-use project including office and retail space, as well as an ice skating rink.
The hotel, which had been a Westin property since 2003, will undergo an extensive renovation over the next year, including a complete remodeling of the guest rooms, the addition of a concierge lounge, creation of a state-of-the-art fitness facility overlooking downtown Dallas and extensive upgrades to the restaurant and lobby area.
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