Morgans Taps Trend With $48M Buy

A $5-million renovation is on the drawing board for the 7353 E. Indian School Rd. property. The plan is to complete the redo by year's end. The Mondrian Scottsdale will remain open during the renovation. The James Hotel was renovated just two years ago by sellers Steve Hansen and Danny Errico, who targeted a younger, upscale crowd with the makeover. Morgans will target the same market, but plans to upgrade public areas and change out the restaurant and bar concepts.

According to Morgans' chief investment officer Marc Gordon, the property has several key elements that supported the acquisition decision. "Scottsdale-Phoenix is synergistic with our assets in Los Angeles and Las Vegas," he says. The Mondrian Hotel Los Angeles opened in 1996; the Mondrian Las Vegas will open in 2010. "These are key feeder markets for each other," Gordon says.

In addition, Gordon says the market fundamentals are particularly attractive to the New York City-based hotelier. "We liked the market. It's a great market on its own," he adds. "It's a growing one with young and affluent people. It's a beautiful place with beautiful weather." Morgans has promoted Don Jacinto, the hotel manager for the Hudson in New York City since 2002, to general manager of the Mondrian Scottsdale.

Jay G. Snyder, partner in Snyder Nationwide Real Estate in Phoenix, says Morgans has tapped into a region where lifestyle hotels are in high demand and a niche market fueled by consumers willing to spend on the experience of a luxury room whether it's Scottsdale or elsewhere in the US. "Thanks to the Internet, there are distribution systems that are effective. These hotel owners can channel into a whole new type of guest, the kind that wants to have fun as well as find a place to sleep," says the broker of hospitality deals nationwide.

In addition, Scottsdale has gained in popularity with tourists. "There was no reason to go to the downtown area at one point," Snyder tells GlobeSt.com. "But with renovation of Old Town Scottsdale, it's becoming a more popular place to visit and to eat."As a result, hotels like the Mondrian and the former Hampton Inn Scottsdale-Old Town, which is being converted into a Hotel Indigo, are more in demand. Gordon indicates that demand will likely lead to another Morgans hotel in the Scottsdale area. "We like to do multiple assets in similar locations," he adds. "We have three hotels in New York, two in Miami and London and two under development in Las Vegas."