Tulsa Club Building - Ross Group to begin renovations

[cannon_fodder]

the Tulsa Club Building has been on a long, steady decline with recent glimmers of home.  But it looks like the saga gets a story book ending!

It was built in 1925 (or 1927 depending on the source) and hosted the Chamber of Commerce as well as the Tulsa Club - with membership dues of $19 per month (up to $119 when it finally closed). It had libraries, dining halls, lounges, large banquet halls, a gymnasium, boxing club, barber shop, and a top/rooftop sky lounge. AbandonedOK has amazing pictures of the past and present condition. The overall building is 92,220 feet in 11 stories.

The Chamber of Commerce moved out in the 1950s. The Tulsa Club survived the oil bust of the 1980s, but folded in 1994.  The out of state investor, CJ Morony, purchased the building in 1997 and held onto it as it fell into disrepair, subjected to break ins, and fires - until the City of Tulsa targeted it as a nuisance starting in 2008, levied fines, and foreclosed on the building. The foreclosure was delayed several times until it was sold at Sheriff's auction in 2013 to Josh Barrett of Vest Properties for $460k.
http://www.tulsaworld.com/business/realestate/tulsa-club-building-revitalization-plan-calls-for-boutique-hotel-restaurant/article_68c7b29b-44ff-5a77-99b1-d4fb47680e11.html

The new owner had high hopes and secured the building, started some clean up, and did some other work on the building. But for whatever reason the project stalled.  The building was sold to the Ross Group in 2015 for a reported $1.5mil. The Ross Group (which employs new City Councilor Kimbro) has been involved in several projects in and around Tulsa, including taking over the First Place Lofts, several hotels under construction in the downtown area, the Coliseum Apartments, and their corporate HQ in the Blue Dome district. Many people don't realize that it is a bigger deal than "just" a local development company.
http://www.tulsaworld.com/business/realestate/tulsa-club-building-sells-to-ross-group-for-million/article_7fef4942-65f7-5125-a2f1-27f012fb0eb6.html

Six months ago it was announced that the plans were pending approval of a 6 year tax abatement, but would include 98 hotel rooms, ground floor restaurant and retail, and a top floor restaurant and bar.  The ballroom was to be restored. The TDA issued a resolution in favor of the tax abatement. The full proposal, proposals, and details are available from the TDA (and are interesting!).
http://www.tulsaworld.com/business/realestate/tulsa-club-building-revitalization-plan-calls-for-boutique-hotel-restaurant/article_68c7b29b-44ff-5a77-99b1-d4fb47680e11.html

Today Channel 6 ran a story that work is going to start "in a couple of weeks." The intentions appear largely as advertised, and include reopening the outdoor terrace on the top floor!
http://www.newson6.com/story/33985189/developers-looking-to-restore-tulsa-club-building-to-former-glory

A huge win for downtown.  New buildings are great (BOK Center, OnePlace Tower, Northwest Mutual Building, new hotels, ballpark, AHHA, Box Yard, etc.) but with empty buildings we also need renovations to help fill in gaps.  This is a great addition!


[edit] Tulsa World Reported today that they are still waiting City Council approval on the tax abatement:
http://www.tulsaworld.com/homepagelatest/tulsa-club-building-renovation-seeking-tax-abatement-from-city-before/article_c740ebf1-86bb-58e4-b232-f9f141c1a028.html [/edit]


Images from AbandonedOK, which has many, many more:

[swake]

This is great news, one of my favorite buildings in Tulsa

[MostSeriousness]

Props to the Ross Group for continued support of Tulsa. They really are doing amazing things. Or more to the point, the right things.

[hello]

 While I'm glad to see parking lots turn into new buildings they tend to be rather boring designs. Can you imagine how much something like the Philtower or Tulsa Club would cost to build today? That's why preservation is important. So happy this building is finally being renovated by a company that seems to understand this.

[Tulsasaurus Rex]

I love the work the Ross Group is doing, and I'm thrilled this jewel in our art deco crown is getting polished. If another Bruce Goff building was lost I would probably throw up my hands and quit. So I want to put this as delicately as possible: another hotel? I'm not a hotelier in Tulsa so I don't know what the demand is like, but as a layman I feel like we have a an inordinate amount of hotels in the works relative to apartment buildings.

[Conan71]

I love the work the Ross Group is doing, and I'm thrilled this jewel in our art deco crown is getting polished. If another Bruce Goff building was lost I would probably throw up my hands and quit. So I want to put this as delicately as possible: another hotel? I'm not a hotelier in Tulsa so I don't know what the demand is like, but as a layman I feel like we have a an inordinate amount of hotels in the works relative to apartment buildings.

My purely uneducated guess would be from a financial model that may be the easiest to justify in a business plan when you are putting the financing together and probably offers a better return than apartments or office space. 

[cannon_fodder]

...another hotel? I'm not a hotelier in Tulsa so I don't know what the demand is like, but as a layman I feel like we have a an inordinate amount of hotels in the works relative to apartment buildings.

I think we have 6 hotels going in (With OnePlace Tower, behind Wright Building, part of Santa Fe Square, Holiday Inn in the Brady, right across from the Courthouse and just announced Tulsa Club)  and I think we have 7 apartment buildings going in or finishing up (Davenport Lofts, Edge, Enterprise, across from the Ballpark, part of Santa Fe Square, YMCA, and 1st Place Lofts). And for every new hotel finished, it seems like there is a new residential project that also finished.

A report in 2014 showed a lack of hotels in spite of a booming downtown- and we hadn't had much downtown hotel growth for a very long time:
http://www.tulsaworld.com/business/realestate/analyst-promotes-rosy-outlook-for-tulsa-s-hotel-industry/article_124a0aca-350d-5674-9e6b-d4ecdc289924.html?_dc=389031193179.11774
http://www.newson6.com/story/28088686/tulsa-developer-booming-downtown-in-need-of-new-hotels

That's when plans for hotels started popping up en mass. Then being added to. Then some more.  The people building them aren't newbies and the flags they are hoisting are established hotel brands that wouldn't agree to brand a hotel if they thought it was likely to fail. The Schneiders have done three, one after the other (Mayo, alot, . The Ross Group has part of three that are going in right now, and just announced this one.  My guess is they know what they are doing.

It probably seems like a lot because we are seeing boutique hotels go in.  100 rooms here, 120 there, 79 there, 105 here.   None of these are giants. All told  I'd be surprised if it was more than 600 rooms.

For perspective, the Downtown Double Tree is 417.  The Hyatt is 454. The Holiday Inn downtown is 220. Instead of getting one new "convention center" hotel and a couple of boutiques, we will get five or 5 boutique hotels.   Pluses and minuses I suppose, but with the addition of the BOK Center, Ballpark, resurgence of Cain's, and people now wanting to stay near the Blue Dome/Brady and events like Tulsa Tough, not too mention no real growth for a decade+... adding hotel rooms makes sense.


http://www.tulsaworld.com/news/downtown/yet-another-new-downtown-tulsa-hotel-planned-this-time-near/article_bfcef537-a412-54a2-b211-7a0255d0efe8.html
http://www.tulsaworld.com/business/realestate/the-planned-hotels-for-downtown-tulsa-are-still-coming-/article_353d261e-f7a8-5fc5-819a-3613e913f3e6.html

Downtown OKC has ~5600 hotel rooms listed as "City Center," but that really looks to be about a 10 minute drive from downtown.  There are ~1500 in the immediate downtown area.

Tulsa has downtown has ~1600 downtown now, but the next ring of hotels is along I-44 and doesn't come close to the number of rooms OKC has in total. Though, the booming casino build may fill that gap (but also provides reasons to fill those rooms).

http://www.meetings-conventions.com/Meeting-Facilities/Tulsa-OK/Hotels?ml=1&st=mtgspc&stod=1&lat=36.149777&long=-95.993398&bz=12

[TulsaGoldenHurriCAN]

I love the work the Ross Group is doing, and I'm thrilled this jewel in our art deco crown is getting polished. If another Bruce Goff building was lost I would probably throw up my hands and quit. So I want to put this as delicately as possible: another hotel? I'm not a hotelier in Tulsa so I don't know what the demand is like, but as a layman I feel like we have a an inordinate amount of hotels in the works relative to apartment buildings.

I agree. So many hotels yet no one wants to make <$400k condos downtown (too low margin? Not enough demand?). So many hotels being built downtown. Thousands of units. How will those get by during the slow season, most of the year? I can't imagine thousands of rooms being booked downtown every single weekend. I know an article earlier this year said we're still far below what is needed in Tulsa for current events and to attract larger events.

I am skeptical we really need THAT many. I am guessing a lot of that is hotel location preference has changed (which is good). Of the existing hotel demand in Tulsa, more would be downtown if that were an option, especially during big events. These new hotels will expand the market slightly if they offer something unique (See Aloft; Or the only hotel in the Brady; right across from BOK Center), but will mostly just siphon market share from existing hotels which are older and further out. Not terrible, that's how it works, and it should bring in more guests to downtown.

Already, you can stay at several of the hotels downtown for around $70/night (especially last minute). That is getting close to the standard rates at the old I44/BA interchange hotel cluster which is a terrible location, albeit convenient for travelers.

I just did a quick search of some of the highest demand days of the year: Dec 23-26 and looks like every hotel downtown has availability. Mayo is the only one above $100/night! Those are the cheapest downtown rates I've seen in a big city any time, especially during a holiday weekend! Maybe they want downtown hotels to all compete with the likes of Motel 6!

[TulsaGoldenHurriCAN]

It probably seems like a lot because we are seeing boutique hotels go in.  100 rooms here, 120 there, 79 there, 105 here.   None of these are giants. All told  I'd be surprised if it was more than 600 rooms.

For perspective, the Downtown Double Tree is 417.  The Hyatt is 454. The Holiday Inn downtown is 220. Instead of getting one new "convention center" hotel and a couple of boutiques, we will get five or 5 boutique hotels.   Pluses and minuses I suppose, but with the addition of the BOK Center, Ballpark, resurgence of Cain's, and people now wanting to stay near the Blue Dome/Brady and events like Tulsa Tough, not too mention no real growth for a decade+... adding hotel rooms makes sense.

That makes sense. Still I would be a bit concerned if I had a big hotel underway and I saw the pricing and availability of existing hotels downtown, not to mention the emergence of Airbnb and Homeaway/VRBO. Tulsa is a cheap hotel market but still, if you are building a new expensive hotel, you probably can't afford to weather the low season and drop to ultra-cheap prices like the Hyatt or Double Tree.

That report was about all hotels soaring in demand around the US, although it did say the downtown Tulsa/Airport market was doing better. There are several new hotels in other parts of Tulsa and suburbs also. I wonder what vacancy rates are at the existing hotels this year (I'd guess oil has taken its toll).

[cannon_fodder]

1. Not thousands of rooms.  To get to thousands of rooms Tulsa would need to build ~20 new hotels downtown.

2. Christmas is a slow time for hotels. People who travel for the holidays dis-proportionally stay with family. The major events are over, tours and shows are generally dormant, athletic events slow down.

Lets look downtown next June during Tulsa Tough...  3 rooms left at the Hyatt, 5 at the Marriot, 5 at the Fairfield, 4 at the Mayo, 5 left at the Ambassador.  Searching for the next weekend we find much the same thing, even after Tulsa Tough is over. Average room rate is $90, 3 star + is $110, 4 star is $220 - a week after Tulsa Tough. And that's 6 months out trying to find ONE room (try to book a block for a team of 6 with 2 staff...).  Pick a random weekend in February, a bit more availability, but still.

Not, I'm sure they reserve rooms from Expedia - but most of the hotels outside of downtown show unlimited availability (not "4 left").

3. Again, the people building are not new to the Tulsa hotel market.  They know the margins, the occupancy rates, the competition that is on the way. If some Las Vegas hotel guy came in and wanted to drop an 800 room convention center... mabe I'd worry about its long term viability. But these people are local and seem to be in the know.

[Bamboo World]

The Tulsa Historical Society and Museum has an online image showing the building under construction, with the Atlas Life Building in the background and houses at 502 and 504 South Cincinnati Avenue in the foreground:

Source: Tulsa Historical Society and Museum

I'm guessing the date is early 1927.

[Tulsasaurus Rex]

These people are local and seem to be in the know.

Fair 'nuff.

[Conan71]

Putting in some rough math:

I believe the Tulsa Club will have 92 hotel rooms.  Total space in the building is reputedly 92,000 ft over 11 floors.  I believe they said two floors will be common areas so average room size should be around 800 or so feet.  At an average rate of $125/night assuming rack rate will be $150 or higher as a boutique hotel.  IIRC, expected occupancy is an average of 90% at least when I interviewed for the marketing director position at Adam's Mark in 1994.  That works out to roughly $3.8 million/year with no food & beverage revenue added in.

So, let's have some fun with this:

I believe Ross was investing $20 million in this project.  

Let's assume you can either spend $20 million on 46 x 1600 square foot apartments or 92 x 800 square foot hotel rooms.  Naturally, there is a higher staffing and operating cost as a hotel but the gross revenue is 2-3 times than that of an apartment complex depending on how much the owner planned to charge per foot as apartments.

Renovate it as 1600/ft. apartments for $2000/month ($1.25/ft) and you get $24,000 in revenue per unit/year over 46 units and you gross $1.1 million per year.  Bump that to $2.00/ft and it still only grosses $1.76 million per year.  Even at an egregious $3/ft you would only gross $2.65 million per year

Add in half your hotel room revenue in F & B sales and it makes pretty good sense you could do better as a hotel.  Add in ballroom sales and special events like weddings and well, it keeps adding up.

As a simple matter of economics, shorter term rentals on your space will or at least should always generate more revenue than longer term contracts.

Since this is a really iconic property similar in stature to The Mayo or Ambassador, you likely can charge a bit more than the average downtown Tulsa room rate assuming management will be really good for the foreseeable future.

I did pull up rates from Expedia during Chili Bowl week 2017 to get an idea during peak events what rooms go for and I'm really surprised downtown Tulsa doesn't command quite the rates of other places my wife and I travel to in their city center.  That does make one wonder if that means there already is a bigger supply than demand or people simply have not gotten the idea there are more rooms in downtown so they take something a few miles out.  Of course Expedia may be screwy as the Expo Inn at the fairgrounds actually does show some available rooms during the Chili Bowl which I find hard to believe since it's a few hundred feet from the Expo Building.

[heironymouspasparagus]

Nice.  Very nice.

[TulsaGoldenHurriCAN]

1. Not thousands of rooms.  To get to thousands of rooms Tulsa would need to build ~20 new hotels downtown.

I understand. I was being a bit facetious and I read your earlier post saying hundreds are being added. Nevertheless, the delay in some of those projects has to make you wonder if the oil downturn and other proposed developments scared some off with the prospect of new competition. Years ago there was one announced somewhat northwest of McNellies by railroad track... I have not seen or heard of any progress.

2. Christmas is a slow time for hotels. People who travel for the holidays dis-proportionally stay with family. The major events are over, tours and shows are generally dormant, athletic events slow down.

No, in Oklahoma, Christmas is one of the busier times. I used to work in a hotel and a close family member I live with still does. Most of January (outside of the chili bowl) early March are the really slow times. Besides big events and holidays, most weeks in Nov-Dec are also slow, but Thanksgiving, Christmas and New Years are typically the busiest times in winter. You can argue Christmas is slower than a typical weekend in the summer/fall, but it is a peak for winter. Many people do not like staying with family over the holidays.

Lets look downtown next June during Tulsa Tough...  3 rooms left at the Hyatt, 5 at the Marriot, 5 at the Fairfield, 4 at the Mayo, 5 left at the Ambassador.  Searching for the next weekend we find much the same thing, even after Tulsa Tough is over. Average room rate is $90, 3 star + is $110, 4 star is $220 - a week after Tulsa Tough. And that's 6 months out trying to find ONE room (try to book a block for a team of 6 with 2 staff...).  Pick a random weekend in February, a bit more availability, but still.

Basically all summer is peak season compared to the winter, especially early summer while weather is still decent and school is out. It makes sense Tulsa Tough would be close to sold out. Some of those hotels only allow very early booking of certain number of rooms to give the impression of limited supply. Even in summer, many weekends you can still get hotel rooms downtown for $70-$80/night, even at newly renovated iloft. If that is an acceptable rate to the investors, then great. Building more hotels to accommodate the few sold-out weekends a year seems wasteful, but the margins on hotels can be pretty high so it makes sense investors are willing to do it.