LOS ANGELES—The River Street power plant in Savannah, Georgia, fascinated Richard Kessler for decades, according to his son Mark Kessler.
The coal-burning plant inhabits a prime piece of real estate along the Savannah River. Since its closure in 2005, it has sat dormant with the four-acre, fenced-off property blocking pedestrian traffic in one of the city’s busiest areas.
So when officials of The Kessler Collection had the chance to jump on buying and developing the property, they felt they had something special on their hands.
“We’ve been developing hotels in Savannah for about 40 years now,” said Mark Kessler, president and COO of design and development, during an interview at the Americas Lodging Investment Summit in Los Angeles.
“My father always had his eye on (the power plant). It’s really the prime piece of real estate in Savannah. … It’s the largest piece of undeveloped land in a National Historic Landmark District in America, according to our architect,” he said.
The plant sits on the site of the original port of Savannah and was turned into a power plant in 1912.
Kessler Collection officials now plan to transform the power plant into a mixed-use development site that will tie together Savannah’s historic and shopping district, creating a new shopping area that will be attached to a JW Marriott-flagged hotel. A natural history museum focused on fossil fuels, a tip of the cap to the site’s history, also will be included in the development. Ultimately, the former power plant will be the focal point of the redeveloped site, but four new buildings will be added to the east and west of it.
Kessler said the power plant site effectively severs one of the city’s busiest areas. To correct that, Kessler Collection’s development plans include adding new pedestrian and vehicular access between the city’s riverfront and historic district.
He said the deal didn’t close until December 2012, which then started a complicated development process that included rezoning the site—which was zoned for industrial use—and lobbying Georgia state government for new historic redevelopment tax incentives.
“Our team spent about six months—and I spent about three months—in Atlanta lobbying all the legislative bodies to make sure this project could happen with tax credits,” Kessler said. “State tax credits were capped at $300,000. We moved that cap to $10 million in tax credits to projects like this.”
He said company officials put together a focus group of local Savannah leaders to decide on the best uses for the site.
“The key takeaway was the No. 1 best use was a mixed-use entertainment site,” Kessler said. “No. 2 was the site lacked connectivity to the rest of the city. … Obviously, there was no motivation to get people down a dirt hill to a shuttered-up power plant.”
The entirety of the hotel project will be under the JW flag. Kessler said his company has previously worked with Marriott International primarily through soft branding with the Autograph Collection—including two properties in Savannah—but he said Marriott was willing to give Kessler Collection some leeway to have a more unique JW property. Kessler said his company was more comfortable doing the project with the power of a brand behind it.
“So, we went to Marriott and said, ‘This is the project we’re working on, and really it can stand on its own as an independent, boutique property, but we’re willing to talk to you guys about what flag we can put on this property,’” Kessler said. “It was really driven by the financial markets. To really get comfortable with (the development), we wanted a flag on there.”
Company officials plan to break ground on the $250-million project this year with an early 2018 opening in their crosshairs. In total, there will be 419 guest rooms on site, 167 of which will be in the old power plant.
The Collection
Kessler said the Savannah project is representative in many ways of how the family likes properties to come together with the Kessler Collection.
The Orlando, Florida-based company focuses on tertiary and secondary markets, and strives to create unique lifestyle properties that can offer something not available in most markets outside the top 25.
“There are people who go to these destinations with their spouses and want a high-end experience,” Kessler said. “They want a great place to stay with a great experience, and that’s what we’re offering.”
He said focusing on secondary markets makes it more straightforward to create entirely unique, market-leading hotels.
The company has 11 properties in its portfolio, and Kessler said executives have identified various markets—particularly those in the south such as Charlotte, North Carolina, and underdeveloped portions of Atlanta—as opportunities for growth.
The company puts a premium on adaptive reuse, historic renovation projects similar to the Savannah power plant and couples them with art galleries, museums and other unique offerings.
“We’re looking for more historic, adaptive reuse opportunities in markets up and down the East Coast and as far west as Texas,” Kessler said. “That’s where we’ll continue to grow.”
Kessler said the company has put an additional focus on food and beverage in the past decade. He said that business segment helps bring more local interest on to the properties, which aids in a hotel’s long-term health.
“We want to cater to the locals as much as our hotel guests and tourists,” Kessler said. “The locals bring a consistent level of business that you can sustain.”