Back Bay Hilton hotel sells for $171 million
New ownership says it plans on cosmetic renovation of 25-story Dalton Street tower
A 390-room Hilton hotel in the heart of Back Bay just sold for $171 million — and more investment from the new ownership is on its way.
New York-based Certares Management and California-based Belcourt Capital Partners teamed up for the purchase of the 40 Dalton St. property from its previous owner, real estate investment trust Ashford Hospitality Trust.
The 25-story Hilton will be Cerates’s 12th hotel and its second Massachusetts property, following its acquisition of Falmouth’s Sea Crest Beach Hotel last year. But the Boston area in particular has long been on the firm’s radar, said Nolan Hecht, senior managing director and head of real estate.
“We love markets that have corporate demand, leisure demand, health care demand, university, and college demand, which Boston has,” said Hecht in an interview with the Globe. “Those type of markets in the US are few and far between.”
Though the new owners aren’t planning any changes to hotel management, they are preparing “a pretty thorough cosmetic renovation,” said Hecht, namely to the guest rooms, the lobby, and other public areas, with an expected investment of $25-30 million. There are no plans to close the hotel during renovations, Hecht added, though some rooms may be temporarily out of commission.
“There was interest from colleges to buy this asset to make it dorms,” said Hecht of the Hilton property. “But this is a successful hotel in the Hilton system, and our game plan is obviously to renovate the hotel . . . we’ll be able to charge higher rates and uplift the asset
in general.”
The acquisition of the hotel — one of just three Hilton properties in the city — comes at a moment of flux for the Back Bay hotel market, which comprises 6,708 rooms, according to Pinnacle Advisory Group.
Steps away from the Hilton property, one of the Sheraton Hotel towers is being repurposed into dorms for Northeastern University students, effectively removing 428 hotel rooms from the neighborhood. Less than a mile away from the Hilton, Raffles Boston debuted last fall with 147 rooms, and a new CitizenM hotel on Newbury Street is slated to open this summer with 399 rooms. There are also several Marriott properties nearby.
Despite this churn, Back Bay is among the city’s healthiest hotel submarkets in the city’s post-pandemic landscape, according to Pinnacle. In February, it was behind only the North/ West End and the Seaport in terms of revenue per available room, an industry metric that takes both occupancy rates and average room cost into account.
The Hilton hotel, which also includes a 209-space parking garage and a restaurant and bar, debuted in 1982. It was bought by Ashford in 2011 from Highland Hospitality as part of a $1.3 billion, 28-hotel acquisition. Highland bought the property from Hilton itself in 2005, paying $110 million for it.
The sale comes amid a bout of financial troubles for Ashford, which is in the process of transferring ownership of 19 of its hotels back to its lenders. Ashford refinanced the mortgage on the Back Bay hotel in 2021.
In January, Ashford announced the Back Bay property was among the hotels it was looking to offload as it seeks to pay off its “strategic financing.” In a news release announcing the sale of the Hilton hotel, the company said it used $68 million in proceeds toward this end.
“We are pleased to announce the closing of the sale of the Hilton Boston Back Bay for a very attractive value and the significant progress we’ve made in paying down our strategic financing,” said Rob Hays, Ashford’s president and CEO, in a statement.