Westin Phoenix Downtown Opens Doors Today

[Source: Megan Neighbor, The Arizona Republic]

Housed in same building as Freeport’s HQ, downtown hotel to target business travelers

Nick Oza/The Arizona Republic

After seven months of construction at the Freeport-McMoRan Center in Phoenix, the Westin Phoenix Downtown will open its doors to guests today.

The 242-room hotel at Central Avenue and Van Buren Street has a cosmopolitan feel, with a lobby on the first floor, nine floors of parking garage and eight floors of hotel.

Above the hotel sits the headquarters of Freeport-McMoRan Copper & Gold, the world’s largest publicly traded copper company.

The hotel will fill a roughly 250,000-square-feet gap that has been vacant since Freeport-McMoRan moved in last year.The opening of the Westin has brought an additional 145 jobs to downtown. More than 7,500 applicants applied.

“The hotel is like a little city – everyone has their knowledge, everyone has their expertise,” said Debra Barton, the hotel’s general manager.

And it caters to a market segment that’s traditionally been underserved in Phoenix, said David Sobek, director of sales and marketing for the hotel.

“By catering to the individual business traveler and small corporate meetings, we are filling a niche that needed to be filled,” Sobek said.

The Westin is dwarfed by the other convention-style hotels in the downtown area, including the 1,000-room Sheraton Phoenix Downtown Hotel, which is owned by the city but managed by the same company as the new Westin – Starwood Hotels & Resorts Worldwide Inc.

The Sheraton Phoenix Downtown has 80,000 square feet of meeting space, compared with the Westin’s 10,316 square feet when pre-function space is not taken into account, and 15,244 square feet when pre-function space is included.

Those numbers illustrate the new hotel’s targeted business model.

Sobek predicts that about 75 percent of the downtown Westin’s revenue will come from individual business travelers, about 20 percent from small group bookings and 5 percent from leisure travel.

“The convention center has done a very good job of attracting groups, and our hotel is intended to kind of catch the spillover of that,” said Ryan Whitaker, director of equity investments for National Real Estate Advisors, which manages the National Electrical Benefit Fund, the building’s owner.

The larger implications of a new hotel also are significant, industry observers say.

The Westin’s opening, when paired with other pending leases in the downtown corridor, could reduce the Class A vacancy rate in Phoenix from more than 28 percent about a year ago, when CityScape mixed-use space and the Freeport-McMoRan headquarters were put into service, to about 18 percent, said Don Mudd, managing director at Jones Lang Lasalle.

“That is a surprisingly wonderful number, considering what many anticipated a year ago,” Mudd said.

Tourism upswing

The hotel’s opening comes at a time when the Phoenix tourism market appears to be finally on the rise.

In January, data provided by Smith Travel Research indicated that the metro Phoenix tourism industry experienced yearly growth in occupancy, average daily rate and revenue per available room. The strong numbers were inflated by fans flocking to the area for the BCS National Championship Game on Jan. 10.

Numbers are not yet available for February.

The new Westin hotel will increase its room rates as occupancy grows, likely becoming the rate leader downtown.

Room rates start at $139, based on a special opening promotion the marketing department recently announced. After 100 rooms are booked, the next-best rate is $199 on March 10, before charges and taxes.

That compares with $219 before charges and taxes at the Wyndham Phoenix, $209 before charges and taxes at the Sheraton Phoenix Downtown Hotel, and $165 before charges and taxes at the Hyatt Regency Phoenix on March 10.

The Westin Phoenix will target room rates between $269 and $369 during the tourism peak season, from about January through April, as demand grows.

“It’s our Westin brand, our Westin product and our Westin service, that sets the rates,” Sobek said. “It’s the whole package, combined with the time of year.”

An August 2009 study conducted by PKF Consulting for the National Electrical Benefit Fund suggests occupancy will grow incrementally at the new hotel during the next four years. The study suggests the occupancy rate will be 52 percent in 2011, reaching 70 percent in 2015.

Whether those projections will be hit is difficult to say. The recession and political controversy have proven to cause seismic shifts in the local tourism industry recently.

The study notes that in the final three months of 2008, when the Sheraton opened, occupancy was well below the market average due to the hotel’s “ramp up,” but average daily rate was above the market average.

In January, the average daily rate for Phoenix was $117.72, less than the Westin’s opening special.

Upscale amenities

Industry insiders say the hotel’s offerings should command higher rates.

“They should and will get an incredible rate because of the amenities they offer, such as larger rooms,” said Steve Moore, president and CEO of the Greater Phoenix Convention and Visitors Bureau.

The rooms at the downtown Westin are 540 square feet on average. All rooms have high ceilings, with ceiling-to-floor glass windows.

The property offers a gym, a full-service signature restaurant and a lounge for executive club members. In total, the ownership group invested an additional approximately $40 million, beyond the more than $200 million originally spent to build the 26-story skyscraper, to make it hotel-ready, said Whitaker of National Real Estate Advisors.

“We went above and beyond in every category,” Whitaker said.

Republic reporter Emily Gersema contributed to this article.

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