WEST PALM BEACH, Florida — Electra America Hospitality Group (EAHG), a joint venture between Electra America and AKA targeting the acquisition and repositioning of underperforming hotels in gateway markets, has purchased a 178-key hotel in the heart of Old Town Alexandria—a hotel that was once a part of the Old Colony Inn—for an undisclosed amount. This comes on the heels of the leasehold acquisition of the Roger New York, a 194-room boutique hotel in Manhattan’s NoMad neighborhood, for $19 million. These transactions mark EAHG’s first two hotel acquisitions since the joint venture launched in February 2021.
EAHG will invest roughly $36 million in the renovation of the Alexandria hotel, and $22 million in upgrades to Roger New York. EAHG has engaged an architectural team for the renovation and design. Both hotels will reopen in 2022 under the AKA brand, offering a mix of short-term and extended-stay lodging options catering to the upscale, leisure, and corporate traveler.
“These acquisitions illustrate Electra America Hospitality Group’s laser focus on exceptionally well-located assets in gateway markets where distress or another combination of factors has created an opportunity to acquire a high-quality hotel at a significant discount and generate long-term value upon the recovery of the hospitality sector,” said Russ Urban, CEO of EAHG. “Our goal is to execute on a bold re-imagining of both hotels that will transform them into the best product in their respective submarkets. Simultaneously, EAHG continues to source opportunities in other major markets where the pandemic has fundamentally altered the hospitality landscape, including Miami, Los Angeles, Nashville, and London, along with New York City and Washington D.C.”
“We’re excited to add these extraordinary properties to our growing hospitality portfolio,” said Larry Korman, president of AKA Hotel Residences and co-CEO of Korman Communities. “We’ve already seen hotel demand pick up in both cities, which are markets where AKA has longstanding expertise and where historically our properties operate at a premium. So far in 2021, AKA properties are operating at a 20 percent occupancy premium versus the overall market in New York City, and at a 30 percent premium in the Washington D.C. area.”
The hotel in Old Town Alexandria will be converted into a four-star hotel with a restaurant. Due to the hotel’s central location in Old Town—and the limited supply of luxury products in nearby markets—EAHG expects the hotel will draw significant business from the large office and government submarkets nearby, including Crystal City and Pentagon City. The property is located within walking distance of many Old Town Alexandria shopping/dining attractions, a short drive to the new Amazon’s HQ2, the new Virginia Tech Washington campus, Ronald Reagan Washington National Airport (DCA), and the U.S. Capitol.
EAHG expressed confidence in the full recovery of the hotel industry in both markets. “In New York City, many hotels have permanently closed and there’s been a fundamental shift in the marketplace, but we fully expect business to come roaring back as it has during past recessions,” said Urban. “Meanwhile, in Alexandria, we have the opportunity to transform the hotel into something unparalleled in that market and cater to strong corporate demand stemming from the large number of industry associations and trade groups in the area, as well as the sizeable government/defense sectors.”