The pandemic triggered seismic shifts across the global hospitality industry, but one under-construction hotel property set to open this summer is aiming to adapt to them all with an "appeal to everyone" approach.
Private equity firm Hawkins Way Capital is moving through the final stages of construction for its dual-branded Marriott hotel in downtown Oakland, California, wrapping up a project that broke ground months before the pandemic hit and which will exit the development pipeline facing an entirely new landscape. Even so, the developer's initial bet on appealing to a diverse group of travelers to the East Bay city may afford it a chance to adapt as the market seeks to regain some pre-COVID-19 momentum.
Located at 1431 Jefferson St. in Oakland's Uptown neighborhood, the Marriott property will span 276 rooms under the global hotel chain's Residence Inn and AC By Marriott brands. The 18-story development includes separate lobbies funneling guests to either the long-term, family-friendly Residence Inn or the modern, upscale business hotel under the AC flag.
A Hawkins Way Capital affiliate acquired the roughly 0.3-acre Jefferson Street site for $19 million in 2017, according to CoStar data. The Los Angeles-based firm did not respond to CoStar News' requests for comment.
Work on the double-branded Marriott began in 2019, just as Oakland's modest hotel market began picking up speed with a series of new additions. A 168-room hotel at 2401 Broadway had broken ground and will soon open as Kissel Uptown Oakland under the Hyatt Hotels umbrella. A few blocks away, Tidewater Capital and Graves Hospitality completed Marriott's Moxy Oakland Downtown property in March 2021, and its 172 rooms now command about $150 per night.
Oakland, a city of about 450,000, now has a hotel market of more than 230 properties, which collectively include more than 21,000 rooms, according to data from CoStar hospitality analytics firm STR. With large companies migrating from San Francisco to the East Bay city over the past several years — tech companies such as Square, Twitter and Credit Karma have offices there — a small handful of developers have tried to stay ahead of what they anticipate will be increased hotel demand, proposing and breaking ground on a number of new projects to boost the city's historically low supply.
More than 1,000 rooms are underway in the Oakland area, a boost STR analysis considers to be a "significant expansion" relative to the city's size. About 10 hospitality projects with roughly 1,400 rooms have been completed over the past three years, and even with the additional rooms, nightly room rates and occupancy levels have been on an upward climb since hitting an early 2020 trough triggered by the onset of the pandemic.
Occupancy levels among Oakland hotels collapsed to less than 30% in April of 2020. In the nearly two years since, it has rebounded to about 55%, according to STR data.