The Boutique Bait-and-Switch, part 1: The Webbs didn’t even try…

Dudley Webb says one of the reasons Jeanne Gang didn’t work out is because no one wanted to build a boutique hotel in downtown Lexington. His evidence for this is that he asked the owners of the 21C Museum Hotel in Louisville.

Webb said he and Gang both talked with the owners of 21C Museum Hotel in Louisville, trying to recruit them to open a hotel in Lexington.

“When that didn’t work, … we went back to our original design for a convention hotel, which is much larger,” he said. Webb said the hotel would be a J.W. Marriott. “The design with the bundles wouldn’t work.”

This is ridiculous.

First of all, there is already a group of investors who have looked at creating a boutique hotel in the heart of Lexington’s downtown. They exist. They’ve studied it, want to do it even. And this was well after the economic collapse. The deal fell hasn’t happened, it’s on hold or being re-thought, it’s on hold, last I heard — but they wanted to do a 21C-style boutique.

So it’s not true that no one is interested.

Putting that aside… people with money are putting money into boutique hotels:

• $200 Million in Orlando: “The development will include a hotel, as well as shopping and restaurants.”

• $3.5 Billion in Stamford: “By next summer it expects to open a boutique hotel and two residential buildings, including a 22-story high rise.”

• Hundreds of Millions from CitiCorp: A $100M boutique in Vancouver and plenty of others.

• $22 Million in Wichita: Which is being protested by Koch-funded Americans for Prosperity. Where ya at, Lexington Tea Party? Let the Webbs hear your voices!

• Charleston, SC: “Because of wetlands and the narrow configuration of the three smaller parcels, a boutique-style hotel would most likely be the option there, Hofford said. If the study calls for a hotel with a convention center and exhibition halls.”

• Boulder Junction, CO: “Plans to build a transit hub, a 140-room upscale boutique hotel and a 71-unit affordable apartment complex at Boulder Junction are moving forward.”

• Miami, FL: “Neighborhoods all over Miami are getting big residential and retail makeovers. The 56-acre Midtown Miami developments second phase, which will start next year, will include a boutique hotel, a movie theater and 100,000 square feet of retail.”

• Tampa, FL: “So far, Buckhorn has talked to four or five developers about the potential for redevelopment and consulted with urban planning experts through the Mayors’ Institute on City Design. The possibility he thinks is strongest is a “boutique hotel” with 100 to 120 rooms.”

The point here is not that anyone’s getting anything done. The point is that people are interested.

The point is that Dudley Webb says he asked one investor if they wanted to fund a world class architect’s vision and when they said they weren’t able to at that moment… Dudley Webb gave up.

Perhaps, you say, all those projects bullet-pointed again were misguided, that they are as fantastical as Gang’s and that Webb made the shrewd decision, looking at the hotel market, to step away from the Boutique Hotel game.

That’s a fine point.

But if that’s what Dudley did, then Dudley’s not listening to the very industry he’s trying, desperately, to insert himself into.

Just this past weekend, industry muckety-mucks gathered in Miami for the ”the third annual Lifestyle/Boutique Hotel Development Conference.”

And what did conference goers learn?

Said Steve Rushmore, head of Hospitality Valuation Services:

He said now is the time to buy a hotel. But he would wait until 2013 or 2014 to sell, particularly in Albuquerque, New Mexico; Norfolk, Virginia; Nashville, Tennessee; St. Louis; or Buffalo—markets “that will not show as great increases” as others. He also suggested independent boutiques with food and beverage do better than brand affiliates and/or foreign boutiques. Among the reasons: no franchise fees, lower administrative costs and marketing fees.

So, in fact, the Webbs have a better chance of funding a non-Marriott hotel… and not just that, a boutique one.

But Dudley asked one group and they said no.

None of this should suggest that funding any hotel development would be easy in this environment.

In fact, Rushmore made clear that to get funding for a successful project, you need to pick your market well:

To minimize volatility, developers should pick safe cities like Orlando, Florida; New Orleans; Seattle; Tucson, Arizona; and Minneapolis. They should avoid high-volatility spots like Jacksonville, Florida; Philadelphia; Charlotte, North Carolina; Houston; Anaheim, California; and Detroit.

You’ll note that each of those “safe cities” cities is a destination already . The idea of trying to create a destination hotel in a non-destination city, let alone a mid-sized one without a major airport hub is not a safe bet and makes funding much more difficult.

The point here isn’t that Dudley can’t get his mammoth Marriott funded. People make bad investments all the time.

And it’s not that he could have necessarily gotten the Gang-design paid-for either… but that he didn’t even try.

And the takeaway from that is that he never really intended to.

He spent the past three months misleading the people of Lexington, just as he’s spent the past three years and, for that matter, the last three decades.

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• Coming Tuesday: How Woodford Webb wooed me but never won my heart.
• And Wednesday: The Boutique Bait & Switch, part 2 — the Marriott Myth.