Marriott Hotel to Provide Relief in San José’s Underserved Hotel Market

Silicon Valley, Bay Area, San Francisco, San José, Marriott, Khanna Properties, Four Points Sheraton, McEnery Convention Center, National Civic Center, Center for the Performing Arts, Diridon Train Station, Tribute Hotels, Le Méridien, Air France,
Rendering courtesy of TCA Architects

By Meghan Hall

With the Silicon Valley technology industry and the Bay Area’s booming life sciences sector, the San Francisco Bay Area is not just a popular destination for the average tourist, but for business travelers as well. The City of San José has seen a burst of development in recent years, but overall the hotel market has lagged behind other sectors of development. A 274-room Marriott hotel, proposed by Khanna Properties Ltd., could help alleviate the City’s need for hotel space.

Khanna Properties Ltd. has proposed to construct a 186,500 square foot, 24 story hotel on the northern portion of the site. The new building would also include a central lobby and rooftop amenities such as a swimming pool, fitness center and events space. The Four Points Sheraton San José— a historic resource which currently has 86 rooms and a ground floor restaurant—will remain as it has been classified as a historical resource within the City of San José.

“San José has become a technology hub, and downtown has become a center of business activity,” said Erik Schoennauer, the land-use property consultant representing Khanna Properties Ltd. throughout the approvals process. “The hotel room count needs to catch up and support that growth of jobs and business activity.”

Schoennauer further explains that no one factor—market or otherwise—contributed to the slight lag of hotel development in the city other than the natural evolution of the city’s development.

“You always have the chicken and the egg scenario,” explained Schoennauer. “You want to have more business activity and larger conventions, but that activity wants more hotel rooms. But people don’t want to build those hotel rooms unless you have that activity.”

The new Marriott is primed for such activity—located at the site of the original Montgomery Hotel, currently occupied by the Four Point Sheraton at 211 South First Street—the hotel is just a block away from the McEnery Convention Center. The City National Civic Center is located just across the street, while the San José Center for the Performing Arts is but a five minute walk away.

The new hotel is also just a few minutes’ drive from Highway 87 and Interstate 280 and is a 20 minute walk from the Diridon Train Station, planned to be one of the Bay Area’s more extensive transportation hubs.

“It will be in a very strong position to do well because geographically it is right in the center of downtown [San José],” said Schoennauer. “It’s easy for people to get to the hotel and be near a lot of transportation and business activity. And for leisure travelers, the center of downtown is a good place to be with all of the restaurants and cultural facilities within walking distance of the hotel.”

The original hotel pitched was going to be part of Marriott’s portfolio of Tribute Hotels, a brand known for its vibrant and colorful modern designs. Schoennauer said, however, the decision has been made to change the branding to Le Méridien. The brand, which was acquired by Marriott in 2016, has more than hundred locations worldwide.

“The hotel has a longstanding relationship with Marriott, and working together it was decided that the Le Méridien brand was the most suitable option for the new, expanded property,” explained Schoennauer of the change.

Schoennauer has no doubt the brand—founded in 1972 by Air France—will be a hit with its modern design. The brand does not yet exist in San José and will differentiate the hotel from its nearby competitors.

“Le Méridien is a spectacular brand that will allow this property to be successful, and it’s a great brand to have in downtown San José,” said Schoennauer. “The strength of such a hotel brand is having global recognition, and the strength of its global reservation system supports that.”

Schoennauer estimates that the cost of the project will be close to $100 million, although he said that with the Bay Area’s rapidly rising construction costs, that number is likely to change.

“We won’t start construction for another year and a half or two years. Who knows what the market will be then,” Schoennauer admitted.

Currently the City of San José is reviewing the application for the project and is carefully evaluating that it both complies with City guidelines and seamlessly integrates the original hotel on the site. The City is working on finalizing environmental review documents, after which the project will go to public hearing and an application for a site development permit will be submitted. Schoennauer hopes the approvals process will be completed by the end of the year, with construction starting in 2020 and lasting around 24 months.

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