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A fledgling hotel operator from the Detroit area has made its first acquisition, buying the Home2 Suites in downtown Indianapolis with plans to update the property later this year.
Delta Hotels LLC bought the 108-room property just one block east of Monument Circle in late January for $13.9 million. State property records were updated to reflect the sale earlier this month.
“We see Indiana—and Indianapolis in particular—as a growing market,” Paul Karmo, vice president of Delta Hotels said. “There’s a lot going on there in terms of sports and universities, and there’s a lot of big companies there. Then there’s also the downtown convention business. … The Indiana Convention Center really does bring quite a bit of business down to the property.”
The hotel is located in what’s known as the annex of the historic Consolidated Building at 115 N. Pennsylvania St. The annex is directly east of the 15-story Consolidated Building with the address 127 E. Wabash St. but has an entrance on Pennsylvania Street.
Karmo said the property sale only accounted for a portion of the company’s investment. Delta also acquired rights to the hotel flag, a figure he declined to share.
He said the family-owned company also plans to spend about $3.2 million to renovate the property over a one-year period, beginning this autumn. The improvements—equal to about $30,000 per room—are part of a formal product improvement plan that most hotels are required to execute every few years by their franchisors.
The property is expected to remain open during the remodel period, with crews going floor-by-floor on improvements to avoid disrupting guests.
A Hilton Hotels flag, Home2 opened in 2015 as part of a larger renovation of the Consolidated Building and its adjacent structure.
The structure was built in 1913 as an office headquarters for the Consolidated Insurance Co. In 2015, IBJ reported that Indianapolis-based TWG Development LLC and Ambrose Property Group were investing $16 million to transform most of the century-old, brick and terra cotta Consolidated Building into 98 market-rate apartments.
IBJ wrote at the time that the development of the hotel annex was a joint venture between East Lansing, Michigan-based HRC Hotels LLC and Valparaiso-based Good Hospitality Services LLC.
The Karmo family has owned several lodging properties in Michigan over the years under multiple companies. Paul Karmo’s father and uncle, Matt and Keith Karmo, owned several hotels across the state in the 1990s.
Delta currently has two hotels in the Detroit area, both of which the firm also developed. While Home2 property represents Delta’s first foray into acquisitions, Paul Karmo said the company has interest in exploring other downtown Indianapolis properties that could be on the market in the future.
“We’re still kind of getting our arms wrapped around [this property] and trying to get settled in, but we are definitely very interested in the market there,” Karmo said. “We’ve just heard through the grapevine that there are a couple other properties that may come online [for sale] nearby, that we’ve shown interest in. So, it’s possible there might be another acquisition there in the next year or two, but no hard plans.”
The hotel employs 28 people. According to Hilton, there are more than 720 Home2 Suites locations across 49 states and two other countries, comprising over 75,000 rooms. Indianapolis has six locations for the brand, making it one of Home2’s most populated markets.
The sale of the Home2 Suites comes during a surge in hotel development activity downtown.
Currently, downtown has just under 8,800 hotel rooms, with the two most recent, Aloft Indianapolis and The InterContinental, opening late last month. The Aloft at 136 E. Market St. is around the corner from Home2 Suites, and The InterContinental is three blocks to the west at 17 W. Market St.
IBJ reported last month that seven hotels with a total of 1.056 rooms have opened downtown in the last five years, and that there are 12 more hotels currently under construction or in the planning stages.
Last week, IBJ reported that Indianapolis-base KennMar LLC and The Ghoman Group plan to spend up to $30 million to convert a portion of the 648,000-square-foot Capital Center office complex into a Moxy hotel.
The hotel will be located on the top seven floors of Capital Center’s south tower at 201 N. Illinois St.
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