Silicon Valley Business Journal
Millennium Hotel, a Flashy Full-Service Brand, Sets Sights on Sunnyvale — Again
By Nathan Donato-Weinstein
Nearly 10 years ago, Sunnyvale’s sprawling Four Points Sheraton came tumbling down, with Silicon Valley poised to get a feather in its cap for a replacement: Northern California’s first Millennium Hotel, a swanky full-service brand with properties in Europe, Asia, the Middle East and a handful of U.S. “gateway cities.”
The economy had other plans. Now, Millennium is resurrecting the project at 1250 Lakeside Drive, which will include 263 guest rooms and 250 apartment units next door.
It’s the latest entrant in the region’s positively bursting hospitality development pipeline, with some 2,211 rooms at some stage of development or construction in the South Bay, according to PKF Consulting. But most of the planned projects are “select-service” hotels — properties that do not include significant restaurant or meeting space.
The Millennium revival is notable because it suggests the market may finally be ripe for full-service hotels that offer more amenities and charge higher nightly rates. That would be great news for cities, which stand to gain more in lucrative hotel taxes as rates climb, as well as businesses seeking more venues to hold meetings and conferences.
“I think it speaks volumes for what people think of Silicon Valley now, that it warrants this type of luxury, full-service hotel,” said Alan X. Reay, president of Atlas Hospitality Group in Irvine.
Millennium makes a move
Millennium’s only other California hotel is the Millennium Biltmore Hotel in Los Angeles, a historic gem known for its marble fountains and frescoed mural ceilings. The brand is part of the Singapore-based Millennium & Copthorne Hotels group, which operates about 120 properties worldwide. “It’s a high-end operator, along the lines of a Ritz-Carlton,” Reay said.
Millennium is a rarity in the hospitality industry in that it owns and operates its hotels, unlike most hotel companies that usually only manage properties owned by third-party franchisees. Millennium acquired the roughly 9-acre Sunnyvale site near the intersection of Lawrence Expressway and Highway 101 years ago, and obtained all the necessary approvals to move forward in 2005.
Like many other hotel projects, it went on ice during the recession, and city approvals expired. In recent years, the site’s neighborhood has bulged with significant tech leasing. Just this year, Palo Alto Networks signed a 750,000-square-foot lease for a project underway a mile away, joining Aruba Networks, which signed for 240,000 square feet at the same project.
Largely on the back of booming business travel, average daily rates have ballooned during the recovery. PKF estimates first-quarter ADR was $206.43 at upper-priced properties in the South Bay, up 12 percent from a year ago.
“At this point, the market has returned, and it’s time to get it going again,” said Kurt Wittek, of Wittek Development, Millennium’s development consultant. “Currently, if you try to get a room during the week, you’re usually shocked at the rates. And the stadium’s proximity adds a whole lot of promise for weekend business.”
Sunnyvale project basics
The new proposal includes the same number of hotel rooms and residential units as the previously approved project. But a few things have changed: The housing component, once envisioned as condos, is now rental. And the hotel’s look has also gotten a major rework, courtesy of the international mega-firm NBBJ.
Preliminary designs submitted to the city show a six-story courtyard building clad in aluminum and glass. Rising 93 feet, the building steps down through a series of terraces, giving its roofline a rakish angle, according to a planning document submitted to the city. A 3,000-square-foot restaurant would front the manmade lake at the center of the block. About 13,000 square feet of meeting space is included.
“They’re not trying to do something that’s cookie-cutter,” Wittek said. “They’re looking to establish a unique presence in the marketplace, with an experience-oriented hotel with some iconic architecture.”
While Wittek said the hotel would be primarily targeted at business travelers, city officials said the project would also provide needed services for residents.
“Having a full-service hotel that also caters to people using the facilities on the weekend, if they want to host a weekend event, a wedding, something off hours — that’s a good amenity for the city,” said Connie Verceles, Sunnyvale’s economic development director. “Meeting space is something we don’t have a lot of, and we do have plenty of demand for that.”
Full-service hotel developers often incorporate some kind of residential component to make the projects, which are more expensive to build and operate than their limited-service cousins, pencil. Designed by BDE Architecture, the apartment building would rise seven stories and also orient out toward the lake. A pedestrian walkway, open to the public, would meander past the lake and link the apartments and hotel. SWA is the landscape architect.
“The attempt is to orient their points of energy toward each other and to the south, creating an energized public space, to the rear,” Wittek said.
More hotels in store
Besides the Millennium, other full-service hotels in the works include a 250-key Marriott Autograph Collection-branded project in Menlo Park and the 23-room Clement Palo Alto, from hotelier Clement Chen. But that pipeline pales in comparison with the bevy of Hampton Inn & Suites, Courtyard by Marriott, Hyatt Place and AC Hotel-flagged projects moving forward up and down the Valley.
In Sunnyvale, Millennium joins several other hospitality projects in the planning process. T2 Hospitality is seeking approvals for two AC Hotel-branded projects, at 725 S. Fair Oaks Ave. and 1235 Bordeaux Drive. (The latter would also include a Courtyard by Marriott.) At 250 E. Java, a developer is entitling a 180-key hotel of an undetermined flag.
While not all the region’s planned hotels will come to fruition, the number of projects could raise questions about oversupply — especially when the next downturn arrives.
But Wittek said the region’s employment growth and improving off-week attractions such as the stadium make it a pretty safe bet. Plus, there was little development during the downturn.
As for when Millennium wants to get going?
“Once the green light is there, yesterday,” Wittek said.