A Four Seasons Downtown Hotel: “If Ownership Is Executed, It Can Succeed” | Jax Daily Record | Jacksonville Daily Record
Right now, some of the highest hotel rates in the Jacksonville area are $ 373 to $ 564 per night, although one of the highest is $ 5,000 per night for the club level, the One-bedroom presidential suite at the Ritz-Carlton Amelia Island. .
Jacksonville Jaguars owner Shad Khan will challenge those rates if his deal is to develop a Four Seasons hotel on the Downtown River.
The Four Seasons Resort at Walt Disney World, closest to Jacksonville, is listed at $ 1,015 per night.
âIf we didn’t think it could be successful, Shad certainly wouldn’t invest that amount of money and Four Seasons wouldn’t be interested in coming here,â Jaguars president Mark Lamping told the Meninak Club in Jacksonville on June 28. .
âIf done correctly, it can be successful. ”
Lamping says he’s confident his organization will have a licensing deal with the Four Seasons hotel brand before the team’s development company opens the land for the Downtown luxury hotel project in June 2022.
Lamping told Downtown Investment Authority board member Oliver Barakat at a June 25 committee meeting that Khan expects at least a 10-year commitment from the company. Four Seasons for the 176-room, 25-condominium luxury hotel project for sale at the former Kampus Kids Site along the Saint John River south of the TIAA Bank field.
âFour Seasons is a public company, so they don’t comment on speculative projects like this,â Lamping said.
âWe would expect a long-term deal with them. They would expect a long-term deal from Shad.
Lamping said Khan, as the owner of the Four Seasons in Toronto, had insight into how the chain negotiates and maintains relationships “at the highest level” of the company.
Lamping also said he has had talks with representatives who handle the Four Seasons licensing agreements.
The team chairman has answered questions from members of the DIA and civic groups about the viability of Four Seasons in downtown Jacksonville since Khan announced his intention on June 3 to build one.
The DIA is considering a $ 114 million municipal incentive deal for the first phase of the shipyard redevelopment. It includes the proposed $ 321 million Four Seasons, a six-story office building and a city-owned marina. The agreement must be approved by the city council.
The proposed list of conditions, slated for a vote on July 7 by the entire DIA board of directors, indicates that Khan and his development company, Iguana Investments Florida LLC, have agreed to a private investment from at least $ 301 million.
According to DIA documents, the development of the hotel and condominium itself will cost a minimum of $ 241.4 million.
How much Khan plans to spend on a hotel and condominium project is a point Lamping uses to convince the DIA, Northeast Florida Jaguar âcommunity caucusâ participants, and civic groups in the area. that a Four Seasons can work downtown.
Downtown hotel market
Khan and Lamping’s point of view is supported by a downtown hotel market study by CBRE Hotels in Atlanta that Iguana commissioned and submitted to the DIA.
He found that a Four Seasons could be successful downtown under the right conditions and with a few caveats.
The study was based on the 2019 average daily room and occupancy rates before the COVID-19 pandemic.
A summary of the DIA staff report indicates that the six existing downtown hotels are not serving the luxury market targeted by Four Seasons.
“(The hotel) will bring new visitors and residents to the area that is not currently served,” said a DIA summary of the CBRE report.
The report says the market includes “non-price sensitive business travelers who prefer luxury hotels and currently avoid staying in downtown Jacksonville.”
When asked in Meninak if Four Seasons would operate downtown, Lamping said:
âWe believe it. Market research suggests we can.
âThe reason is that if you separate all the people who come to Jacksonville and stay in hotel rooms, there is a burst, it’s actually about 10%, who are looking for hotel rooms in the downtown. city ââthat are not price sensitive.
“They just want to get the best place near where they want to be.”
CBRE’s analysis puts the average daily rates for a Downtown Four Seasons at $ 411 per night in 2025, rising to $ 462 by 2029.
Three of the Four Seasons hotels in Florida had room rates of up to $ 1,335 per night and suite prices of up to $ 8,400 at the Four Seasons Resort in Walt Disney World Orlando, according to a June 29 survey of the websites. online booking and hotels.
The closest comparable rate to the Four Seasons in Florida is $ 459 to $ 995 per night on Brickell Avenue in Miami, near the Miami South Channel waterfront.
CBRE estimates that the Jacksonville Four Seasons would have 57% occupancy when it opens and could reach 70% by 2029.
According to the DIA summary, downtown Jacksonville hotels had occupancy rates of 75.2% in 2018 and 73.5% in 2019.
The report says regional competition for the Four Seasons includes the Ritz-Carlton Amelia Island, the Cloister at Sea Island, and the Ponte Vedra Inn & Club.
Rooms at the Ponte Vedra Inn & Club ranged from $ 373 to $ 564 per night in June.
CBRE also said downtown Jacksonville could accommodate up to 79 Four Seasons residences, and Khan’s original plans for 25 significantly reduced the risk of the project.
âWe’re not adding to other condominium projects in downtown Jacksonville because these are going to be really, really upscale,â Lamping told Meninak.
âThe market for this product is limited.
Without the city’s help, the DIA study summary shows that the hotel / condo project would not be able to generate enough money to cover its debt service or a positive cash return. during the first 10 years of operation after the sale of the condominium units.
CBRE’s estimated funding gap of $ 56.5 million would likely be filled by the enhanced value recovery grant of $ 47.68 million, a completion grant of $ 25.83 million, and a grant of 12 , $ 45 million in hotel land in the city.
The CBRE report says the hotel and residences would otherwise have to cut construction costs to achieve this level of return, but that calculation does not include the $ 85.9 million in cash, land, and tax incentives from the city for the hotel and the office building.
Khan’s 20-year property tax incentive in the city development agreement is tied to the quality of the hotel and the brand.
If the board approves the deal as written, the hotel will open as a Four Seasons.
Lamping said on June 25 that the Jaguars did not anticipate the need to change the hotel’s flag, but the deal gives Khan that flexibility under certain conditions.
If Khan or the owner of the hotel plot at the time wants to change the flag to a Four Seasons, the conditions sheet says the DIA must approve it to “ensure the hotel continues to be operated by a luxury brand “- a four- or five-star product as determined by Forbes Travel Guide or” another respected source in the hospitality industry. ”
If the DIA does not approve the flag change, the hotel owner can still change the brand but will lose the remaining REV grant money.
Lamping said it could be helpful if Four Seasons changed its corporate name.
Barakat said knowing that negotiations were active with Four Seasons and that the city would receive “some quality hotel experience” for its investment made him feel better.
“My concern is that we provide that incentive to build this building, the flag goes off, and then we bring a three star flag that rivals our existing inventory, which wouldn’t be the best practice for us.”
Real world view
In Clay County, Karrie Masssee owns The Club Continental and Azaleana Manor hotels, with rates from $ 115 to $ 259 per night.
Massee has seen demand rebound for better quality hotel products as the pandemic abates.
She thinks there’s a deal for a Four Seasons in Jacksonville.
âPeople come from New York, Connecticut, New Jersey and California and are used to such high rates and that’s what they expect to pay,â she said.
âWhen they don’t, they almost worry about the quality of the hotel.
Massee said her guests at Azaleana and the Continental Club are of all ages, but she has seen high traffic from those in their 30-year-old home who hunt in Northeast Florida and that “the money does not seem to be an object for them “.
She has also booked patients at the Mayo Clinic, a category of clients Khan wants to attract to the Four Seasons.
Lamping says the hotel could accommodate medical tourists coming to Jacksonville for treatment.
The Jaguars want to expand this market with its partnership with Baptist Health to build a 42,000 square foot orthopedic medical center adjacent to the Four Seasons in the second phase of shipyard development.
The list of conditions gives the Jaguars until Dec.31, 2024 to replace any other offers the city receives for the 4.96-acre site.
Despite the uncertainty and financial risk associated with marketing a speculative five-star hotel in downtown Jacksonville, Lamping said the wording of the deal with the city shows Khan’s commitment to it.
âThe fact that we stated that this would be a Four Seasons hotel in our terms sheet should give you an indication of our confidence,â Lamping said.
Associate Editor Max Marbut contributed to this report.