AEDP helped Hotel Heron’s developers secure gap financing to restore a historic hotel location — and create a new gateway to welcome visitors to Old Town Alexandria.
Hotel Heron will be located at the former George Mason Hotel at 699 Prince Street. In 2023, construction is well underway, and the hotel is expected to open in 2024. The hotel will include 134 rooms, a ground-floor restaurant, a rooftop bar, and meeting space.
The project is a partnership between Aparium Hotel Group, May Reigler Properties, and Potomac Investment Properties. Founded in 2011, Aparium is a leading hotel operator; it was named #12 Best Hotel Brand in the World in Travel & Leisure’s 2021 World’s Best Awards. In 2022, three of its properties were included in the Condé Nast Traveler Readers’ Choice Awards.
“Alexandria is a world-class destination that combines deep history with meaningful arts and culture,” said Aparium Hotel Group Partner Michael Kitchen. “Despite this, we felt there was a void in greater hotels and food and beverage that catered as much to the locals as to visiting guests. We also were drawn to the opportunity to bring this early 20th-century purpose-built hotel back to its original use, while infusing our translocal hospitality philosophy and injecting the energy and soul that defines Alexandria’s creative class.”
The hotel project has been underway for several years—interior demolition took place in 2019—but after the COVID-19 pandemic hit in 2020, banks became more reluctant to lend to hospitality projects, as lockdown continued and tourism plummeted across the country.
But as the U.S. began to open up and people began to travel again, AEDP knew that Alexandria’s tourism industry would rebound and that, thanks to some recently converted older hotel properties, the City needed additional hotel rooms.
Working with Visit Alexandria to document the gap between supply and expected demand, AEDP found a way to help the development team restart the project, facilitating an application to Virginia’s Tourism Development Financing Program (TDFP). AEDP shepherded Alexandria’s participation in TDFP, which provides gap financing to tourism projects. Through the TDFP, the developer was able to issue bonds to raise the money that closes its $6 million gap in financing.
The bond debt is owned by the developer — not the city or local property taxpayers — and it will be repaid by the developer and through future sales tax revenue generated by those who stay, dine, and use the hotel.
“Through this state program we were able to identify a creative solution to solve a funding problem caused by the pandemic,” said AEDP President and CEO Stephanie Landrum. “This model is especially innovative because it keeps the risk with the developer, but allows the community to share in the benefits once the hotel is constructed.”
To proceed with the program, Alexandria City Council created the city’s first tourism zone. The establishment of the tourism zone provides a blueprint for AEDP and the City to explore future projects that support and grow tourism throughout the City, attracting more visitors to local businesses and growing sales tax revenue.
“We will continue to work with Visit Alexandria and City staff to explore other opportunities to use tourism zones strategically to keep Alexandria as a top destination,” said Landrum.