HRGA's office conversion to hotel with Hume Development was featured in Business Journal.
To those who wonder about the prospects for an office-to-hotel conversion developer Roger Hume is proposing for 700 J St. in Downtown Sacramento, one number makes the argument in favor — two.
As in, only two new hotel rooms in the urban core since 2019, the net total when you factor in both new projects like the Exchange hotel on Fourth Street and the subtraction of rooms from residential conversions like the Holiday Inn Express on 16th Street.
"If you're looking at it from a development standpoint, there's demand and not enough supply," said Mike Testa, president and CEO for Visit Sacramento, the city's convention and visitors bureau.
Testa said he frequently cites the "two" number to push for more hotels, though with the pending opening of the 179-room AC Marriott on Seventh Street, he won't have it to tout much longer.
All the same, the central city is still undersupplied in hotel rooms. In 2019, just before the Covid-19 pandemic, occupancy rates for hotels regionally were around 83%, he said. Typically, going above 80% means it's time to build some more.
But while the pandemic dropped occupancy in some suburban areas to around 70%, it's now closer to the mid-80% mark in Downtown/Midtown Sacramento, Testa said.
That becomes an issue when the city hosts a big event like the recent Unified Wine & Grape Symposium, he said. To accommodate everyone, he said, he has to contract with more than 20 hotels, while in some larger cities, all the convention guests could stay in one or two larger, 500 or 1,000-room hotels.
He added another point to make the case for more hotels: It's not just about conventions. The Aftershock Festival in Discovery Park books every hotel room from Yolo to Placer County, and most of those aren't booked in a block, like in a convention, but rather individually, he said. Usually, that means hotels make more money off them because they're not leased in wholesale fashion, if you will.
Hume, who previously developed the former Order of the Eastern Star building at 2719 K St. into a 128-room Hyatt House, wants to add a few more rooms with his new proposal.
The application calls for a hotel of 107 rooms at 700 J St., with a ground-floor bar/restaurant concept in a space originally built for a bank over a century ago. Hume said he's aiming for the kind of spot locals will insist on taking visitors to.
"It's something that will be special for the city and something we don't have now," Hume said. "The building is historic in nature, and we'll pay tribute to the past and the architecture, but I'm also imagining something bigger."
Though he just submitted plans, the conversion could be underway within about a year, said Hume, who is in contract to acquire the seven-story building.
Testa, with Visit Sacramento, said he won't look down on a proposal even if it's relatively few rooms. "It all helps," he said, adding the more tantalizing prospect is a 28-story, 330-room hotel in the works on 15th Street immediately east of the expanded SAFE Credit Union Convention Center.
"Three hundred rooms by the convention center would be a game-changer," he said.