Witness Investment Case Study: New Philadelphia, Ohio Development
Just as the economy goes through a cycle, real estate development can have several phases of “lives” within a single development to ensure optimal economic return and use of the real estate.?The Witness Group?has a living example of this adaptation over time with its development in New Philadelphia, Ohio over a period of more than 30 years. This case study showcases the strength of The Witness Group across all three of its core solutions: Investment, Construction, and Management. All three solutions led to the long-term success and ability to adapt to changing market conditions.
- 1985?– We bought a two-story Holiday Inn with 150 rooms on 4.5 acres. The hotel was going to lose the Holiday Inn franchise due to product quality and management, so there was an opportunity to buy the asset at a discount. Upon purchase, we converted the hotel to an economy brand, Econo Lodge, with minimal renovation cost. We introduced a lean operating structure and produced strong cash flow and return through efficient management.
- 1989?– After stabilizing the hotel as an economy brand and understanding the market, we leveraged our success at this hotel to regain the Holiday Inn franchise with Intercontinental Hotel Group. This was an opportunity to do a value-add conversion, as the Holiday Inn franchise brought higher occupancy and rate compared to an Econo Lodge. We used our construction expertise to efficiently convert the hotel from a Econo Lodge to a Holiday Inn.
- 1999?– After running the Holiday Inn for 10 years, we noticed that the full service hotel market demand was dwindling in New Philadelphia. As a result, we made the decision to split the hotel into two separate brands. We retained 107 rooms for the Holiday Inn and converted 42 rooms to a Super 8 and created a separate lobby and entrance on the back side of the building. This enabled us to compress the full service Holiday Inn to a smaller and more manageable product to serve the full service hotel demand while also capturing a growing economy segment with the Super 8.
- 2010?– As the need for a full service product continued its decline and the popularity of IHG’s select service brand, Holiday Inn Express, gained traction, we decided to tear down the Holiday Inn building and develop a brand new 83 room Holiday Inn Express. Additionally, we decided to convert the 42 room Super 8 into a 66 room Best Western using some of the Holiday Inn building that was not torn down and salvaging the original indoor pool from the Holiday Inn. This re-development enabled us to have the newest premium select service brand in the immediate market as well as the newest midscale brand with the Best Western. The conversion led to immediate success with the Holiday Inn Express gaining fair share within the first three months of opening. Additionally, due to handling the construction in house, we were able to maintain a below market budget and enhance returns.
- 2017?– Lastly, due to the large original land footprint of the old Holiday Inn prototypes and our ability to gain density on the Holiday Inn Express with a four story building, there was an acre of land left over from the original purchase. As a result, we decided to create a 10,000 square foot retail center that would be anchored by Starbucks and Chipotle. This would not only enhance the economic return of the entire development and add diversification in income, but it would also complement the hotel and add a strong amenity for the guests.
Interested in learning more about hotel conversion case studies? Read our?blog post?about our conversion of an underperforming Best Western to a successful Homewood Suites!