Indy airport board approves plans for $206M hotel. Here’s when it could open.

The $206 million Marriott project will be the Indianapolis International Airport's first terminal-connected hotel. It's expected to feature 253 rooms, a fitness center, a full-service restaurant and a seventh-floor bar, lounge and restaurant. (Provided by the Indianapolis International Airport)

Construction on a new terminal hotel at Indianapolis International Airport is scheduled for take off later this year. The project’s nearly $206 million budget was given final clearance Friday morning.

The Indianapolis Airport Authority board of directors voted unanimously to advance the Marriott Westin project, completing a punch list of final approvals for various contracts such as design, construction, project management and the franchise agreement.

The Westin Indianapolis Airport, planned for construction directly west of the airport’s existing parking garage, is expected to comprise 253 rooms at a starting rate of about $245 per night. It will feature a fitness center, a full-service restaurant and a seventh-floor bar, lounge and restaurant offering limited service.

The hotel would also have about 10,000 square feet of meeting space and a passage connecting the terminal to the hotel through the third floor of the parking garage. There would also be 120 parking spaces dedicated to the hotel itself.

The property is set to open by late 2027, with a goal of having 76% occupancy annually starting in its third year of operation.

“We are excited to be in this position to finally present this project [to the board], so that we can collectively move forward and construct what I think is just going to be a tremendous asset to not just the airport, but to this entire community,” Jonathan Weinzapfel, general counsel for the airport, said during the meeting.

The vote comes just under a year after the budget for the hotel was slashed by $57 million, to its current estimate. The March 2024 decision eliminated a pool, a $10 million passageway from the third floor of the parking garage and a $1 million water feature. 

The total budget for the project is $205.9 million, which includes a $10 million reserve fund. Shiel Sexton Company Inc., the construction manager on the project, has set a guaranteed maximum price for the project at $155 million, although the figure could change based on costs of materials and labor availability.

The project is “focused on public service, public value and customer service,” Weinzapfel said. “It will pay for itself over time, but that’s not the real driver behind this project. It is really to create an asset that mirrors this great terminal with a hotel that is going to be convenient for the people who use this facility to travel.”

The authority plans to pay for most of the project using general airport revenue bonds, rather than hotel revenue-secured bonds like the city obtained for the downtown Signia hotel project.

While bonds issued for the project would be repaid over a period of 40 years (or over 30 years with a single balloon payment), at least $64 million is being put in by the airport through its financial reserves to cover upfront costs and a contingency for construction. The airport expects to have $277 million in total cash on hand—including $82.5 million in unrestricted cash—after allocating funds for the project.

Airport officials have considered building a hotel next to the terminal since planning for the current midfield complex began in the early 2000s. The authority most recently revived considerations for such a project in late 2022, before moving ahead with the project over the past few years.

The board approved a franchise agreement in September 2023 with Marriott for the then-proposed hotel to carry the Westin brand. As part of the agreement, the airport has the right to terminate the deal if it can’t obtain adequate financing to construct the hotel or otherwise decides to not move ahead with the project.

The board also approved several other contract amendments related to the hotel during Friday’s meeting, all of which are considered in the hotel’s total budget:

• The airport authority authorized updates to the franchise agreement with Marriott to prevent it from being operated privately, in order for it to receive tax-exempt bonds.
• The board approved terms for the management of the hotel by Wischermann Partners Inc., allowing for an initial five-year term and two, five-year renewals. It will receive a base management fee of 3% of total revenue and incentive-based management fee of 1% of total revenue, if it meets highest Marriott guest satisfaction rating and hotel revenue beats expectations by at least 5%.
• CHM Warwick secured an amendment to its contract to provide additional asset management services until the hotel opens, including ensuring the design and construction meets brand standards, helping with marketing and public relations, advising on reopening sales, reviewing proposed staffing and budgets and reviewing purchase of supplies and equipment. It could receive up to $342,000 for the additional work.
• R-W Purchasing Partners Inc. will have a purchasing budget of $11.7 million to procure furniture, fixtures, equipment and operating supplies for the hotel. It will also source vendors for the equipment, as well as inventory management, warehouse management and installation. The company will receive up to $212,570 for the additional services.
• Allbridge LLC will provide additional information technology services, including design, procurement and installation of equipment, for the project using a $4.1 million budget. It is expected to receive as much as $109,550 for the new work scope.
• Hotel designer CSO Inc. will remain involved in the project through its opening (and a one-year warranty period).