Government House lends itself to "repositioning" because of its design and historic character, Garrett said. Government House's purchasers could have refurbished it as an affordable inn, he said, but the city already has several such hotels. He said the first-year response to the Four Seasons shows there is a market for more luxe accommodations in the city.

"Baltimore has overbuilt in the middle-of-the-road to mediocre" range, he said. "People want something different, not more of the same."

The Ivy will aim to draw sophisticated travelers who are looking for a "romantic getaway" and will pay for a memorable ambience, food and service, Garrett said. It will also appeal to business travelers and people coming to local hospitals for medical care, Azola said.

Garrett added that he doesn't believe the state of the surrounding area will hinder efforts to draw patrons. He said local residents may know that a jail is nearby, but most visitors won't.

"The guests don't know what they're looking at, and they don't stare out the window all the time," he said. "They'll be in a world of their own. Our objective is to make it so attractive they won't want to go anywhere else."

Plans by Ziger/Snead LLP call for a multi-level addition containing a new entrance facing Biddle Street. A garage for valet parking will be built on land that Eddie Brown owns on Guilford Avenue, and the restaurant and bar will be open both to hotel guests and the general public, Azola said.

Petrik, the lodging analyst, said boutique hotels in New York and San Francisco generally succeed "when they are in areas where people want to be, where there is night life and entertainment." In Baltimore, he said, much of that activity "has gravitated to Harbor East."

At the same time, he said, "developers make money by taking risks that the more prudent man would not take. They are the eternal optimists."

Garrett said he thinks The Ivy will be a catalyst for other improvements to the surrounding area.

"Hotels like this bring a vitality to the community," he said. "You'll begin to see other things happening nearby."

ed.gunts@baltsun.com

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