A local hotel owner and developer plans to break ground this week on an $18 million project that will bring a four-story Holiday Inn Express & Suites and Staybridge Suites to Dearborn’s Michigan Avenue.
The development is one of three projects totaling $49 million in investment that owner Akram Namou has in the works to pair limited-service and extended-stay offerings next door to each other.
Similar projects are planned for a former office building site on the west side of Stephenson Highway, north of 14 Mile Road in Troy, and the current site of Rodeway Inn & Suites Hotel on Van Dyke Avenue north of 13 Mile in Warren — which is set to be demolished within six months to make way for the development.
Collectively, the three projects are expected to create 225-235 new hospitality jobs. None of the three include local or state incentives. Namou and his co-investors are refinancing some of their other properties to bring seed money to the new projects, and banks are financing 75 percent of the projects’ costs.
Flagstar Bank is financing the Dearborn project, and Wells Fargo & Co. is financing the Troy deal, Namou said. He is still working on financing for the Warren location.
“The economy is improving. The banks have opened up, and financing is available,” said Namou, a retired CPA who is president and CEO of Southfield-based A&M Hospitality Services Inc. A&M provides cleaning and maintenance services to the hotels he co-owns with local operators.
Namou, 64, co-owns 10 full-service hotels and 70 limited-service hotels and extended-stay properties, most in Southeast Michigan. But he also has ownership in a handful of hotels in Grand Rapids and Toledo and plans to open a 79-room Holiday Inn Express & Suites in Frankenmuth July 1.
Occupancy rates are on the rise in Michigan, driven by the rebounding economy and the state’s Pure Michigan campaign, Namou said.
As Crain’s reported in March, metro Detroit hotel occupancy reached its highest rate in at least a dozen years last year — 63 percent — capping four years of progress on hotel check-ins.
Industry experts and the region’s hotel operators say average occupancy rates are still on the way up, propelled by a resurgence in business travel and corporate meetings and an increasing number of large conventions and conferences coming to Detroit.
Occupancy rates for hotels and motels in Wayne, Oakland and Macomb counties reached 63.1 percent last year, up from 61.9 percent the year before, according to the Detroit Metro Convention & Visitors Bureau. That compares with 47.5 percent in 2009 and 55.3 percent in 2008, before the recession.
Detroit hotels are running at about the same occupancy rate as Chicago and are leading Midwestern Rust Belt cities, including Indianapolis and Cleveland, Ann Arbor-based hospitality consultant Charles Skelton said in March.
Dearborn
The new Dearborn hotels, not far from Ford Motor Co.’s world headquarters, will help meet corporate and leisure traveler demand from visitors to The Henry Ford museum and Greenfield Village, Namou said. It’s also a good central location to the city of Detroit and Detroit Metropolitan Airport.
Namou and fellow investor Malik Abdulnoor, who will operate the Dearborn hotels, purchased the site at the southwest corner of Michigan Avenue and Telegraph Road last year for $2 million from West Dearborn Lodging LLC. After razing the former Showcase Dearborn movie theater on the site, Namou and Abdulnoor plan to break ground this week on a 105-room Holiday Inn Express and 99-suite Staybridge Suites.
The Dearborn hotels should be completed within a year, Namou said.
Birmingham-based Saroki Architecture is architect and Bloomfield Hills-based Jonna Construction Co. LLC is contractor for both the Dearborn and Troy projects.
Troy
Demolition of an empty office building on Stephenson just north of 14 Mile in Troy began in early May to clear space for a similar development, Namou said. He said there are several other investors on the project, separate from the operator/investors on the Dearborn and Warren projects.
“Troy is a highly corporate area, and our Marriott flags satisfy that corporate need,” Namou said.
Construction should begin by August and be completed within a year, he said. When completed, the 91-room Fairfield Inn & Suites and TownePlace Suites by Marriott extended stay with 89 suites are expected to create a total of 55 jobs.
The Troy City Council approved the preliminary site plan for the project in November but has yet to approve the final site plan, said Brent Savidant, the city’s planning director.
Namou plans to transfer the Fairfield Inn flag for the new site from a nearby hotel at Stephenson and I-75 south of 14 Mile in Madison Heights to the new limited-service hotel in Troy.
He plans to convert the Madison Heights hotel, meanwhile, to the economy brand Baymont Inn & Suites. Marriott did not review its license.
Warren
In Warren, Namou said he and the local operators/co-owners of the Rodeway Inn, brothers Saher and Maher Abdulnoor (siblings to Malik, the Dearborn investor) are preparing to demolish the aging hotel within six months. The Abdulnoors previously operated supermarket and liquor stores in Detroit.
A 100-room Hampton Inn & Suites and Homewood Suites extended stay with 100 suites will take its place within two years, Namou said. Construction on the $16 million project is scheduled to begin in 2015. The architect and contractor for the project have yet to be named.
When completed, the two hotels, a half mile from the General Motors Tech Center, are expected to create 60 jobs.
Developing and operating paired hotels that complement one another leverages efficiencies in both construction and operations, since it allows the two hotels to share a director of sales, general manager, maintenance manager and other key staff, said Ron Wilson, CEO of Troy-based Hotel Investment Services Inc., in an email.
The hotel market in Southeast Michigan is good and getting better, he said. Local, regional and national banks are lending again and starting to get competitive with loan terms. But, he said, “only well-capitalized deals are getting done so that should provide some backstop to when the economy dips again.”
Banks are lending to people who have staying power, “so that when there’s a hiccup, they’re not going to run out of cash,” he said.
