Experiential travel is huge with today’s guests, who are particularly enamored with hotels that put effort into providing unique aesthetics or have close ties to their local community. But while improved online search engines and reinvigorated interest in these hotels has created a boutique renaissance, the operators of these properties still struggle to expand due to rising construction costs and shrinking real estate options. This is why 21c Museum Hotels, a niche hospitality company based in Louisville, Ky., is partnering with Junius Hospitality Partners, an investment arm of J.P. Morgan Private Bank, to build and acquire hotels under the 21c brand.
21c began as an investment from contemporary art collectors Laura Lee Brown and Steve Wilson, who in 2006 opened a property in Louisville with the goal of revitalizing the city’s downtown through a combination of hospitality and art. Located inside a series of 19th-century warehouses, the property was able to offer all the trappings of a full boutique hotel, such as a food-and-beverage component, as well as an art museum open to both guests and locals.
“In April of 2006, we had no intention of [building] more hotels,” said Craig Greenberg, president and founding partner of 21c Museum Hotels. “Our mission then was very purposeful, and since then, based on the positive feedback, we were encouraged to develop more hotels, in other people’s hometowns. A lot of folks approached us to help revitalize those areas.”
Sculpting Hospitality
Today, 21c has six hotels and seven restaurants in Louisville; Cincinnati; Bentonville, Ark.; Durham, N.C.; Lexington, Ky.; and Oklahoma City. The company doubled its footprint over the past 18 months, with three new hotels and restaurants opening to the public.
By signing its latest agreement with Junius, 21c will have the ability to develop up to $250 million in projects, with financing already closed on a new development in Nashville. This new hotel will open in the first half of 2017 in the city’s former Gray & Dudley Building, and will include 124 guestrooms, more than 10,500 square feet of museum and event space and five rooftop-level rooms with private terraces. According to Greenberg, developing in Nashville was a long-term plan that is just now coming to fruition.
“Nashville is just down the road from us,” Greenberg said. “We were looking for an opportunity there before many others in the hotel industry were, [but] it has taken time. We were lucky to have found the building.”
As part of the deal with Junius, the company will own a minority stake in 21c, but according to Greenberg, this is a small price to pay for access to a strong investment arm.
“The folks on their team have a lot of relevant and unique experiences in the hotel and real estate finance industries that support and complement our team and growth plans,” Greenberg said. “[Junius] has members who have been involved in hotel operations and real estate development in larger cities across America, finding projects with some of the same complexities that our properties call for.”
Expanded Coverage
While development costs have thus far limited 21c Museum Hotel’s expansion to smaller cities, the company is decidedly selective with where it places its properties. The company’s goal is, above all, the revitalization of urban centers through art, but thanks to its relationship with Junius, placing hotels in large cities is within reach. Greenberg specifically earmarked areas of Washington, D.C., Miami and New Orleans as destinations for future development, but said the search has just begun.
“As we continue to see a positive social and financial response to these hotels, we and those at Junius believe we can have successful properties in any city,” Greenberg said. “At this time, we can proactively look for opportunities for developments in any city.”
Greenberg is confident in the 21c model, especially as traveler interest in localized experiences grows.
“Guests want an interesting neighborhood and unique experience, and we think contemporary art exhibits, delivered in a compelling fashion, are of great interest to both locals and travelers,” he said. “Combined with strong F&B and great hospitality, we think that combination, when in a unique environment, will be successful. We’re going to continue to develop these projects for a long time.”