by Cheryl-Anne Sturken | May 01, 2007

Four Seasons Austin


Lavish lounge:
A typical Four Seasons
atmosphere (Austin, Texas)

There was a time when the only place a business traveler could count on finding a brand-name luxury hotel was in the major gateway cities. Not any more. Today, brands such as Fairmont, Four Seasons and Ritz-Carlton increasingly are expanding into second- and third-tier markets.

Toronto-based Four Seasons Hotels & Resorts, which already has properties in Denver and Austin, Texas, will give Baltimore’s Inner Harbor significant luxury cachet with the new 199-room Four Seasons Baltimore, to open by 2010. Likewise, downtown Pittsburgh stands to benefit from the 185-room Fairmont, to open in 2009 with 12,000 square feet of meeting space.

“Pittsburgh doesn’t have the depth of demand some larger cities have, but it is ready for a well-focused luxury hotel,” said Matthew Sparks, senior vice president of development for Toronto-based Fairmont. “It will cater to the city’s group demand, which is growing.”

Just because a property pops up in a hitherto untapped market shouldn’t be seen as a sign of the brand trading down, Sparks noted, citing the new 330-room Fairmont, with a 14,000-square foot Willow Stream spa, being built in Monterey, Calif. “There has been no luxury hotel built there in many years,” he said. “We simply are taking advantage of the strong market for a luxury asset.”

Suburban creep, corporate relocation and the growing legions of brand-loyal travelers also are fueling the expansion into markets luxury brands might not have considered viable before, said Robert Mandelbaum, director of research information services for Atlanta-based PKF Hospitality Research. “Some of these cities, Denver for example, are not so secondary anymore,” he said. “They have growing numbers of people clamoring for a certain level of luxury in the hotel market, which means the market can sustain higher room rates.”

According to PricewaterhouseCoopers’ 2006 U.S. Lodging Industry Briefing, released last December, the luxury hotel segment had the highest increase in average daily rates for 2006 -- 9 percent, compared with an industry average of 6.8 percent -- and also racked up the largest increase in revenue per available room (RevPAR), at 11 percent, compared to 8 percent for the overall hospitality industry.

Also following the money trail is the Ritz-Carlton Hotel Co., based in Chevy Chase, Md. In the next two years, the chain plans to open new properties in Charlotte, N.C.; Denver; and White Plains, N.Y.