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Five years out from the pandemic, the Indianapolis tourism industry has bounced back in a big way, and hotel developers’ bullish outlook might be best exhibited by the spate of hotels opening, under construction and coming down the pike.
More than $1 billion in hotels and associated projects is under construction or set to begin in the next 12 months. Another several hundred million dollars’ worth of investment is under consideration or in the planning stages.
Along Georgia Street alone, the $571 million Signia by Hilton convention center hotel is about one-quarter complete, and an entertainment venue and $250 million Shinola hotel are set to replace the former CSX office building across Pennsylvania Street from Gainbridge Fieldhouse.
“It’s a strong pipeline, and there’s some really great projects that we are excited to see under construction right now, or that are coming up here in the next few years,” said Megan Vukusich, director of the city’s Department of Metropolitan Development.
The downtown market this year has grown to 8,784 rooms with the additions of two long-awaited hotels—Aloft Indianapolis and The InterContinental—both set to open in coming days.
The Aloft, a 128-room property aimed at younger business and leisure travelers, was announced in 2018 as a $15 million project meant to convert the former Stock Yards Bank & Trust building on East Market Street.
The InterContinental will begin taking reservations from general clients next week, after an eight-year effort to overhaul the historic Illinois Building between Monument Circle and the Indiana Statehouse. Indianapolis-based developer Keystone Group saw its project budget nearly double throughout construction, swelling from $61 million to $101 million as of last spring, thanks in part to the pandemic.
Plenty to come
An IBJ analysis found that the current hotel pipeline will add another 2,300 rooms to downtown over the next several years if every planned development moves forward, an increase of more than 25% from current levels.
While that figure marks a drop from what the industry projected pre-pandemic for this point—IBJ reported in late 2019 that as many as 3,100 rooms were in the works—nearly 1,100 new rooms at seven hotels have opened downtown since late 2020. Those projects include the Bottleworks Hotel, Hotel Indy and the dual-branded Hampton Inn and Homewood Suites across West Street from Indiana University Indianapolis.
Chris Gahl, executive vice president of nonprofit tourism agency Visit Indy, said the group is keeping a close eye on the inventory set to come online downtown over the next several years. Gahl said while it’s likely not every project in the pipeline will be built, the group is confident Indianapolis can support a large influx of new rooms.
“Research shows that Indianapolis, and our hotel market, is more dependent on convention-related business than any other market in the United States,” he said. “So, because we have grown the convention side of our tourism business and kept [big] groups … hotels are benefiting, as are other members of the tourism ecosystem.”
Gahl said 2024 was one of the most active years in the city’s 100-year-plus history of hosting major events, recording nine of its top 10 days for hotel bookings. Those events included the National Eucharistic Congress, Gen Con, the total solar eclipse and Taylor Swift’s three-night stop at Lucas Oil Stadium. More than 10 million passengers last year traveled through Indianapolis International Airport.
The Signia by Hilton, which will add more than 800 rooms to downtown, is critical to growth of the city’s tourism industry.
The project is being finished by the city of Indianapolis using hotel revenue bonds after it took over the development from Indianapolis-based Kite Realty Group Trust in 2023.
Last week, IBJ reported that the project’s anticipated cost had grown 14%, from $501 million to $571 million. The Capital Improvement Board of Marion County, which is managing the project on behalf of Mayor Joe Hogsett’s administration, will foot that increase. The hotel is being developed alongside the adjoining $210 million addition to the Indiana Convention Center.
The prospect of the hotel is already leading to new conventions, Gahl told IBJ.
Two major medical conventions, the American Academy of Family Physicians and the American Society of Plastic Surgeons, have committed to meet in Indianapolis for their 2028 and 2033 events, respectively. Gahl said each group cited the Signia and Indianapolis’ growing role as a market for medical group travel as key factors in the decision.
The Signia is one of just a handful of planned or ongoing projects that are new construction. Most others are repurposing historic office buildings.
The Motto hotel at 1 N. Meridian St. and Kimpton at 1 N. Pennsylvania St., for example, are both adaptive reuse projects, along with a proposed project at the Capital Center towers in the 200 block of North Illinois Street that would repurpose more than 200,000 square feet of vacant office space into a luxury hotel.
The Kimpton is now under construction (efforts to reach representatives of Indianapolis-based developer Silverstone Development were unsuccessful), while construction of the Motto is set to begin later this year; the Capital Center project is still in the planning stages.
Gahl said because the Signia is to be a convention center hotel, focused on serving thousands of guests per day like the JW Marriott, it will not likely cater to guests seeking an experience offered by boutique properties in historic structures.
“Our research shows that the number of rooms within these [boutique] hotels can be supported by our anticipated tourism growth, especially when considering their physical locations and the history behind the buildings that are being reused,” Gahl said.
Making room
Another project in the works is from Indianapolis-based Dora Hospitality Group, which plans to build a six-story Residence Inn on the south end of downtown, between Lucas Oil Stadium and Interstate 70. The project will include 139 hotel rooms and 66 small apartments.
CEO Vincent Dora said while Indianapolis has been successful in maintaining convention traffic even from the early days of the pandemic—the convention center was among the first to reopen nationwide, largely for athletic events—bringing back business travelers, at least at pre-2020 levels, continues to be a challenge.
“When Visit Indy brings a big group in, everyone wins, and it’s all-hands-on-deck, and we’re really, really busy,” he said. “However, on the days where there is not a big event going on, everyone’s struggling a bit with the overall occupancy.”
Dora, who is developing the project alongside Shapiro’s Delicatessen owner Brian Shapiro, said the project isn’t off the ground yet due to continued cost increases and labor shortages in the construction industry. The project was announced in August 2019 and has undergone several iterations, the most recent of which added a rooftop bar and apartments.
He said the delays have helped clarify project financials and assess the project’s timing in relation to the city’s hotel pipeline. He’s working through the loan process now and expects to start construction this year.
“If five, six or seven hotels are opening all at once,” Dora said, “each with 150 to 200-plus rooms, the amount of availability is going to affect your bottom line. If they’re spaced out over three years, and you only have to absorb one hotel every two quarters, it just makes it a lot easier for everyone to … figure it out.”
Farther north on Meridian Street, other projects have been canceled altogether. That includes a planned massive overhaul of the Morrison Opera Place building at 47 S. Meridian St. by former owner Bruce Bodner, who sold the building in 2023. The property is now expected to remain office space.
Mike Wells, president of Carmel-based REI Real Estate Services, said his long-gestating plan to develop a dual-branded Moxy and AC hotel at 125 S. Meridian St., north of the building housing Spot Freight, will not happen.
He said the company will probably market the building in the next year because, while it currently makes money as a surface parking lot, it would be a strong site for development. REI has active projects in cities like Austin, Texas, and Nashville, Tennessee, but it no longer has anything in the works here.
“We’re looking at the market, but we’re treading lightly,” he said, referring to the Meridian Street property. “Somebody could build [a hotel] there, but it won’t be us.”•
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