While conversions of historic buildings to high-end hotels have been taking place for decades, the trend has
accelerated over the past several years, driven by a demand for one-of-a-kind hotel designs. The following
looks at some of the challenges and rewards developers and hotel companies can expect when tackling a
historic conversion project. The OpportunitiesThe redevelopment of historic buildings offers quantitative and
qualitative rewards, and these apply to both the developers and the communities and neighborhoods in
which their projects are set. On a cost basis, for example, tax incentives and/or tax abatement programs can
serve as a major incentive for the redevelopment of a heritage property. Historic properties that have stood
dormant for years present several cost-saving opportunities on the local level. These include property-tax
abatements effective for a certain period of years, the recapture of hotel occupancy taxes, or tax-increment
financing. On the federal side, the IRS often provides tax credits for a developer willing to tackle a historic
property conversion. The rehabilitation of heritage sites and buildings also provides developers with powerful
marketing and branding opportunities. Most heritage buildings have a unique, even colorful history. People
recognize them as distinct, fascinating, and even unforgettable. Consider the standout branding advantage
of the gigantic pair of winged horses, fashioned in fiery-red neon, that top the 29-story Magnolia Hotel Dallas.
The horses, installed in 1934 and originating from the logo of Magnolia Oil, can be seen from the streets
below and the windows of planes approaching Dallas, characterizing the hotel from miles away. Interior
elements of historic buildings bring marketing value, as well. Old bank vaults become meeting spaces or
private dining rooms. Offices in Beaux Arts buildings transform into upscale guestrooms. Carved marble
floors and balustrades become the distinguishing décor of a luxury hotel. High-profile examples of historic
interiors include the Old Post Office Pavilion in Washington, D.C. (Trump International Hotel); the Le Méridien
in Tampa, Florida; and the Renaissance City Center in Denver, Colorado. In addition to financial and marketing
incentives for developers, the redevelopment of historic assets tends to garner significant support, both
official and informal, from local communities and neighborhoods. Beloved but blighted buildings can serve as
a catalyst for surrounding ancillary development that otherwise would not have been considered feasible
without a significant anchor. For example, 21c Museum Hotel developments have been catalysts for
revitalization efforts in their respective neighborhoods of Louisville, Kentucky, and Oklahoma City, Oklahoma.