InterContinental Hotel set to open this fall, bringing downtown another luxury lodging option

More than a decade after acquiring the historic Illinois Building, developer Keystone Group is just months away from opening a 170-room InterContinental Hotel at the site, a project that will bring a fourth option in the luxury lodging category to downtown.

The $101 million project at 17 W. Market St. will include a rooftop bar with views of the Soldiers and Sailors Monument and just enough meeting space for executive events as well as smaller high-end weddings, fundraisers and social events.

The opening—expected to happen in October—will arrive more than six years after Keystone first proposed using the former office building for a hotel, and it follows years of starts and stops related to the pandemic as well as the company’s efforts to maintain the building’s historic significance.

Alexandra Miller, Keystone’s senior director of communications and public relations, said the company took the time to register the property as a landmark because “preserving the magnificence of the building was important to us.”

“Developing a luxury experience takes time, too,” she said. “Keystone took the time to deliver a top-of-the-line product and deliver it right. The pandemic and post COVID issues touched every industry and arguably hit hospitality the hardest.”

Built in 1925, the building is one of several on or near Monument Circle designed by Rubush and Hunter, one of the city’s top architectural firms in the early 20th century. Other prominent Rubush and Hunter buildings include the Columbia Club and the Circle Tower.

Keystone bought the property in 2013, after it was listed a Top 10 endangered property by Indiana Landmarks. The building—which had housed a food court on the ground floor and office space above—was emptied by previous owner HGD Mansur in 2002, leaving it without any tenants and no public plan for the space. Indiana Landmarks officials were worried at the time that the building might be torn down.

Three years after acquiring the building, Keystone secured Hyde Park Steakhouse and Giordano’s Pizza as ground-floor retail tenants. It was negotiating at the time to put a Canopy by Hilton hotel on the upper floors. But that deal fell through, clearing the way for Keystone to announce the InterContinental project in 2018.

At the same time, Keystone announced a redevelopment of the AT&T office tower at 220 N. Meridian St. Together, the projects were expected to cost $141 million, with $16.7 million contributed by the city through tax-increment financing.

Of that total, the Illinois Building was expected to cost about $61 million, with the remaining $80 million earmarked for the remake of the AT&T building into the 220 Meridian apartment tower, which opened its first apartments in 2022 and will be fully completed in 2025.

But the price of renovating the Illinois Building jumped as Keystone has sought to deliver what it expects will be the city’s most high-end hotel—and as prices increased during the construction delays.

Extended timeline

The work was originally set to start in late 2018, with a 12- to 14-month construction timeline. But the start was delayed as the company worked with the city to finalize its incentive package and pursued a designation that would allow for the use of redevelopment investment tax credits for the project. The pandemic and subsequent drop in business travel also led Keystone to shuffle the timing of some of its projects.

Miller said Keystone’s focus on using the building’s historic architecture as assets that underscore the luxury nature of the InterContinental brand also added time.

“The architecture is spectacular and was deserving of all the attention we are giving it,” she said. “We want to preserve the history of the Illinois Building and keep the beauty of the past intact while bringing a state-of-the-art luxury concept to Indianapolis that is an answer to a need in the market. But historical buildings pose their own unique obstacles.”

Among those challenges has been elements like the elevator shafts, which had to be modified to meet modern day code requirements and industry standards. The project has also required a “complete overhaul” of the building’s plumbing and flooring systems, Miller said.

Michael Moros, general manager for the hotel, said securing some of the fixtures and furniture has been challenging over the past several months due to challenges with supply chains and the fact that every piece is made-to-order. He said while that has loosened some recently, some of the delays for the project have been driven by ensuring the property receives the top-notch finishes it calls for.

“Every bit of the furniture fixtures and equipment is custom, and we’re watching it be designed, whether it’s the headboards, the lobby chairs or the banquet tables,” he said.

He said three InterContinental hotels are scheduled to open prior to the one in the Illinois Building, and all three have been facing similar issues. “The length of time to design something so custom is extended,” Moros said, “and it does take a little bit of time to get that expertise in this.”

Hotel and local tourism officials said one of the most significant parts of the project has been the addition of an entire floor on the property’s rooftop, which will offer the 200-seat restaurant and cocktail lounge.

Miller, said adding such an element—which required shutting down part or all of Market Street for days at a time, due to the use of a massive crane—“is going to test your engineering and creativity” from a design and execution perspective.

Even so, she said, the project is “worth it because Keystone is bringing a luxury rooftop experience against a backdrop of historical and architectural significance.”

Chris Gahl, executive vice president of Visit Indy, agreed.

“In sitting with Keystone and their leadership team, we know they have invested an incredible amount of time, effort, energy and creativity into the art and architecture, as well as the food and hospitality functions, of the hotel,” he said.

“Cities, as destinations, are always looking for unique places and spaces for special events, receptions and skyline views, so this rooftop feature is really appealing from a tourism perspective.”

Height of luxury

Keystone in recent years has taken on several major projects across central Indiana. In addition to 220 Meridian, which is the largest office-to-apartment conversion in the city’s history, Keystone is also developing the $1.5 billion Eleven Park district on the eastern bank of the White River near Lucas Oil Stadium. That project, which will span 20 acres, is expected to include a 20,000-seat soccer stadium, a 4,000-seat indoor entertainment venue, more than 600 apartments, a pair of high-end hotels, office space, retail and restaurants, and extensive public gathering areas. The stadium is expected to open in mid-2026, as part of the development’s first phase.

The company is also developing The Alexander at the Crossing property on the north side of Indianapolis, near Keystone at the Crossing. That property, which will have extensive apartment, restaurant and retail offerings, is set to get off the ground later this year. A future phase of that project is expected to feature a hotel and office space.

“The expansion of our hospitality division at Eleven Park and Alexander at the Crossing is intentional as Keystone continues to support the growth of tourism and quality of life in Indianapolis,” said Miller.

Keystone inked its license agreement with United Kingdom-based InterContinental Hotels Group (known as IHG) in 2018. The InterContinental brand was founded in 1946 and is generally considered the world’s first international luxury hotel brand—and among the swankiest. There are about 240 Intercontinental Hotels in more than 60 countries, but only 34 in North America. The nearest is in Chicago.

According to CoStar Group, a Washington, D.C.-based real estate data, analytics and information company, Indianapolis only has a handful of properties that are luxury class—the same category as the InterContinental brand. Those include the Ironworks and Bottleworks hotels from Hendricks Commercial Properties, the JW Marriott and the Conrad. When it is completed, the Signia by Hilton hotel at Pan Am Plaza will also be in that class.

In 2023, the city’s luxury properties saw an occupancy of just more than 64%—an increase of 3.5 percentage points from a year before—with average daily room rates of $194.

Jan Freitag, national director of hospitality analytics for CoStar, said he expects the occupancy and room rates to continue to increase in the coming years in Indianapolis, even with the addition of the InterContinental.

“What we found after the pandemic … is the desire of the American leisure consumer to spend money on experiences versus products,” he said. “That has helped luxury room rates overall, and luxury hotels have done tremendously well.”

He said the InterContinental property will likely “attract high-end meeting and corporate clients, and the good news is that the [hospitality] market economy continues to grow.”

A unique challenge

Zachary Lockett is the opening sales manager for the hotel. He said that one of the biggest challenges with securing bookings for the property when it opens will be educating travelers on the InterContinential brand, given it’s not as broadly known in the United States as it is overseas.

“Downtown has had a rough couple of years, thanks to the pandemic, and now we get to introduce a new hotel that is a very high-end product, with this major international luxury brand right next to Monument Circle,” he said.

Indianapolis could have another high-end IHG-brand hotel on the way with the proposed Kimpton property at 1 N. Pennsylvania St. Construction there started in 2018 but also stalled. The developer for that property, Silverstone Development (formerly known as Loftus Robinson), did not return calls requesting comment for this story.

“I think it’s just a great time to be introducing” the InterContinental, Lockett said, adding that he believes there could be brand collaboration between the InterContinental and the future Kimpton.

He said the target audience for the InterContinental is much different than other hotel properties downtown—including the Conrad and JW Marriott—because they cater to the city’s convention industry. The InterContinental’s smaller size—its 170 rooms will place it among the bottom quarter of all downtown hotels by total rooms—means the property will focus more on corporate events like executive retreats and board meetings as well as fundraisers and smaller fundrasiers.

“It’s a bit of a different sell, but Indy is ready for that,” Lockett said. “I think you’re going to see a … business mix where through the week—we’ll have the business travelers and conventions and some smaller executive blocks, before shifting gears into the weekend for special events, concerts, celebratory travel, weddings, anniversaries, birthdays, that sort of thing.”

Chris Gahl, executive vice president of Visit Indy, said the downtown hospitality industry will benefit from the property’s opening later this year. He said the hotel will help fill out the city’s lodging infrastructure, which now comprises 8,400 rooms.

“Adding another new hotel flag to our city skyline not only helps diversify the types of hotels we offer but it also grows the total number of rooms downtown, which is equally important,” he said.

“We’re confident that bringing the Intercontinental Hotel online later this year is perfectly placed within the holistic picture we’ve painted of downtown as a destination for meetings and leisure. … And having a very sophisticated luxury brand like this, steps from Monument Circle, is very helpful in attracting new convention business.”

According to CoStar, only two other hotels are actively under construction in downtown’s hotel pipeline—the 128-room Aloft property on East Market Street, which is set to open this summer, and the Motto by Hilton project at 1 N. Meridian St., which will offer 116 rooms.•