When the Four Seasons Baltimore opened last year on the downtown waterfront, it became one of the city's most expensive hotels, with rooms starting at $279 per night.
Now a local development group plans to open a boutique hotel featuring rooms that will be far more pricey — averaging nearly $650 a night — in a part of town away from the harbor and not known for commanding such rates.
The $16 million project, called The Ivy, is planned to open by spring 2014 inside the former Inn at Government House property at Calvert and Biddle streets in Mount Vernon.
"You will feel like you're in your own mansion," rather than a large hotel, said Martin Azola, a principal in the development group, Mt. Vernon Mansion LLC.
Neighborhood leaders overwhelmingly support the project, said Paul Warren, chairman of the Mount Vernon Belvedere Association's development committee.
"This positively reflects the direction the neighborhood is headed in," Warren said. "We feel it is a world-class neighborhood, and it's not surprising to us, but we are certainly happy to see it. … It is an extremely exciting project."
The hotel will be created inside a three-building complex that was run as an inn for more than two decades by the city of Baltimore but is now closed.
The new owners, who bought the property in June for $750,000, plan to upgrade it to include a restaurant, bar, private garden and meeting space as well as 18 high-end guest rooms. According to Azola, rooms will likely start at $350 a night and rise to $1,500, and the average daily rate will be $647. There will be staff of about 50, he added.
Rod Petrik, managing director of Stifel Nicolaus & Co. and an analyst who follows the hospitality industry, calculated that $16 million invested for an 18-room hotel works out to about $888,000 per room key. "That's a lot of money for Baltimore," he said. "Those are expensive keys."
Any time developers in Baltimore have tried to "push the ceiling" with rates higher than they have been, "it's generally not been a good thing." Petrik said. "That has been true across the board, whether it's hotels or housing or offices. I think it's risky."
Skeptics of the project note that the buildings targeted for renovation are within blocks of the city's largest jail, homeless shelter and soup kitchen, and close to the block of Chase Street where two men were shot last summer, one fatally.
"They're charging how much? And they think they can get it? They'll probably need their own security force," said Neal Foore of Neal's The Hair Studio on Park Avenue near Read Street. "It would be great if they can get it. I hope it happens. But I doubt that it will."
Besides Martin Azola and his son, Tony, of Azola and Associates, the principals of Mt. Vernon Mansion LLC include philanthropists Sylvia and Eddie Brown, who were behind the Bromo Seltzer tower renovation. Eddie Brown is chairman and chief executive of Brown Capital Management, with offices one block north.
The Calvert Street buildings date from the late 1800s and were converted in 1986 to a 21-room "urban inn" and hotel management training center, the brainchild of former Mayor William Donald Schaefer. Before that, the northernmost building was home to the founder of the Crown Cork and Seal empire. Adjacent buildings also started as residences.
Local antiques dealers helped furnish the inn. After Schaefer left the mayor's office, the inn stayed open but was never a money-maker for the city.
The Azolas and the Browns were selected to develop the hotel in 2009, after submitting a proposal to the city. They initially proposed to invest about $6 million. Azola explained that as they studied the property, the partners concluded it had the potential to be more upscale than they first thought and the price tag grew to $16 million.
Azola said the development team now aims to make The Ivy the first hotel in Maryland to be flagged under of the Relais & Chateaux brand of hotels that are considered by many to be among the world's most luxurious. The closest Relais & Chateaux properties are The Inn at Little Washington in Virginia and The Jefferson in Washington, D.C.
The developers hope to begin construction next spring. Much of the change in plans, Azola said, came after the team hired David Garrett, a hotel expert who formerly headed Relais & Chateaux and now runs a Vermont-based firm called Garrett Hotel Consultants, helping others create high-end hotels.
Garrett said he is a distant relative of the Baltimore-based Garretts, who founded the Baltimore & Ohio Railroad. He said The Ivy is part of a national trend in which developers are building intimate, world-class "super-boutique" hotels, usually with 50 or fewer guest rooms, for affluent travelers seeking one-of-a-kind experiences.
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."