Interior designer Andrew Ashey's client was worried about the blue tile.
Ashey and client Midnight Auteur Hotels were discussing the main lobby for Municipal Grand, a former city office building that was remade into a 44-room hotel that opened last year in Savannah, Georgia. In crafting a sophisticated look, they took a chance, deciding to restore the vivid blue tiling that also wraps around the lobby bar. It paid off: The space was later cited in Travel and Leisure magazine as among the best U.S. cocktail bars.
For local leaders, the renovation represents how greater Savannah, an area of more than 430,000 residents, has grown beyond its reputation as a quaint, old-fashioned town. While live oaks draped with Spanish moss still stand, as do historic mansions from the early 18th century, the area boasts world-class restaurants and bars, as well as a yearly film festival attended by Hollywood stars.
Savannah has moved beyond popular books and 1990s movies that spotlighted the area as the "Old South," local business leaders said. "We're no longer just 'Midnight in the Garden of Good and Evil' or 'Forrest Gump,'" Michael Owens, CEO of the Savannah Tourism Leadership Council, told CoStar News.
Municipal Grand is one of several hotels that have either opened recently or are under construction in Savannah's 2-square-mile historic district. The hotels come in a range of styles, from the historic preservation of a 112-year-old former office building to a boutique hotel that uses mass timber, a modern building technique gaining popularity in architectural circles.
The wave of new hotels has emerged because Savannah's tourism industry is booming, but the supply of available rooms has lagged.
Revenue from hotel room taxes increased 54% to $56.2 million in 2024, compared to 2021, according to the Savannah Area Chamber of Commerce. The number of overnight stays in the same time jumped 20% to 7.2 million. But the supply of lodging rooms has barely kept pace, with the number rising 3.1% to 18,777 rooms in 2024.
That shortage of rooms appears to be about to ease, according to Chantal Wu, senior director of hospitality market analytics at CoStar. About 2,000 rooms are under construction across 17 hotels in the Savannah market, about 10.2% of the existing inventory, according to CoStar data. Nationwide, hotel rooms under construction account for 2.3% of total industry supply.
"Savannah maintains the most robust construction pipeline in the Southeast," Wu said. "Developers are flocking to this market."
Shifting trends
The Southeast region's hotel market is starting to grow, too. Between October and December last year, 29 hotels opened in the Southeast with a total of about 3,800 rooms, a 35% increase from the same time in 2024, according to CoStar data. About 1,200 rooms, or a third of the region's total, opened in Georgia.
But Savannah needs quality, in addition to quantity, Owens said. As more high-end restaurants and shops open in Savannah's historic district, the supply of luxury hotels must also grow.
"We're seeing nicer rooms and we're seeing more affluent travelers," Owens said.
Despite the crop of new hotels in the works, the city's rigorous historic-preservation rules make it challenging to develop new properties, Owens said. But the historic preservation board's guidelines also lead to better designs.
"That's how you get the very expensive brick and stone facades" on new hotels and other buildings, Owens said.
It's also difficult to find land in the historic district, a reason why many hotel developers choose to pursue the conversion of historic buildings, said Owens.
Hotel conversions
Portland, Oregon-based hospitality company McMenamins Pubs, Breweries & Hotels specializes in the restoration and conversion of historic buildings to hotels, restaurants and bars. It's a costly and time-consuming business model, but one that pays off for investors and developers who don't demand short-term profits, said George Signori, principal at architecture firm Ankrom Moisan.
The Elks Temple in Tacoma, Washington, was one of the most challenging projects that Ankrom Moisan has handled for McMenamins because of the decrepit condition of the pre-renovation structure, Signori said. After making extensive repairs, the former Elks lodge was reopened as a hotel and restaurant in 2018.
"I don't know if the McMenamins business model can be replicated," Signori told CoStar News. "Not everyone has the patience that they have."
In addition to Municipal Grand, two other hotels in development in historic Savannah involve preservation. Left Lane Development plans to convert the Manger Building from an office property into a 136-room hotel, its original use. Left Lane also developed Hotel Bardo, a 149-room hotel in the 19th-century Mansion on Forsyth Park that opened in 2005 and was renovated in 2024.
The Sabal House project is new construction, led by DoveHill, Kim King Associates and Ross Hotel Partners, that uses mass timber as structural support. But the project is directly affected by historic preservation guidelines. The 64-room hotel is an expansion of the Presidents' Quarters Inn, a Federal-style mansion that dates to 1855. Sabal House is also adjacent to the Owens-Thomas House and Slave Quarters, a mansion dating to 1819 managed by the nonprofit Telfair Museums.
The 148-room Tempo by Hilton, developed by Noble Investment Group and expected to open later this year, is new construction, but its location required a design that's sensitive to its historic surroundings.
"Historic preservation rules do have an impact on cost," Ben Brunt, managing principal and chief investment officer at Noble, told CoStar News. "We also know that that provides a number of barriers to entry. Not everyone is willing to take on those challenges."
Noble obtained a waiver from the Savannah Downtown Historic District Board of Review that allowed the company to bypass city height restrictions to add a seventh floor with guest rooms and an outdoor deck, Brunt said. In exchange, Noble agreed to include setbacks on the exterior facade that help the structure blend with the surrounding historic buildings.
Noble also reached an agreement with InterPark to upgrade and manage a parking deck at 20 Lincoln St. for use as the hotel's parking. The hotel will not have an underground parking garage.
New construction
Other new hotels developed through ground-up construction include North Point Hospitality's AC Hotel, a 170-room property that sits next to the Savannah River, and Signia by Hilton, a 44-room hotel on the opposite side of the river on Hutchinson Island, developed by Songy Highroads and Matthews Hospitality. The Signia is set to be connected to the Savannah Convention Center.
One of the trickiest parts of the Municipal Grand project was how to balance the preservation of midcentury modern design elements without overstating the style's quirkiness, Ashey said.
"A lot of times people think of Southern California and Palm Springs when you think of midcentury modern, but we didn't want this to be a weird time capsule," Ashey said. "We tried to not lean too much on tropes like the Jetsons," referring to the animated TV sitcom set in the future.
The design team accomplished this, Ashey said, by creating a large bar in the center of the lobby made of dark-colored walnut in a semicircle form, and infusing the lobby with plenty of plants, flowers and window coverings that helped create an atmosphere of mystery. The blue mosaic tile that initially worried Midnight Auteur Hotels because it was so vivid ended up providing a whimsical contrast to the warm colors of the wood and flooring.
The decision to retain as much as possible was also made because the project's financing depended on federal historic tax credits. Those incentives require that a substantial amount of the original structure be retained.
"The blue tile, the metal handrails, the terrazzo flooring in the lobby and the black terrazzo walls at the elevators, we kept as much as we could," Ashey said.
For the record
Lynch Associates Architects was the architect of record, and Ward Architecture was the historic preservation consultant for Municipal Grand. Gunn Meyerhoff Shay is the design architect for Sabal House. Niles Bolton Associates is the design architect for Tempo by Hilton. Atelier Pond is the interior designer for Recess Hotel. Cooper Carry is the design architect for Signia by Hilton.