Hotel Heron, Alexandria Project With Gap Funding, To Open In Late 2023

ALEXANDRIA, VA — A new hotel called Hotel Heron will open in the restored building of Old Town Alexandria's historic George Mason Hotel. The project is being assisted by a gap financing program using state and local tax revenues once open.

Located at 699 Prince Street, Hotel Heron will offer 134 guest rooms, a ground-floor restaurant, a rooftop bar, 30,000 square feet of amenities and meeting space. The project is a partnership between Aparium Hotel Group, May Reigler Properties and Potomac Investment Properties. Aparium Hotel Group owns 10 hotel properties in the U.S.

Construction on Hotel Heron has begun, and completion is expected in late 2023.

"We are excited to continue on a steady path of growth with new openings that supports our goal of connecting travelers to unique experiences and culture in important cities and neighborhoods throughout the country," said Mario Tricoci, founder and CEO of Aparium Hotel Group. "Our curated pipeline of projects underscores our commitment to delivering one-of-one hotels and food & beverage concepts that harness a city’s spirit."

The hotel will be next to the offices of the Alexandria Economic Development Partnership, which helped the project secure gap funding. The gap funding is being provided through Virginia's Tourism Development Financing Program, a state and local financing program for tourism projects. According to Stephanie Landrum, president and CEO of the Alexandria Economic Development Partnership, the program was identified as an option to close the project's financing gap as the COVID-19 impacted lending for hotel projects.

The hotel project has been in the works for years, securing city land use approvals before interior demolition started in 2019. The project had been ready to secure a construction loan when the COVID-19 pandemic hit in 2020.

"In the short term, banks got nervous about financing hospitality projects, which had taken such a big hit in the early shutdown days," Landrum said in an email to Patch. "But in the long term, we believe—and we are seeing—that people are eager to return to travel generally and Alexandria specifically more than ever, and we want to be ready for them."

Under the Tourism Development Financing Program, the project receives gap funding from state and local revenues. According to Landrum, the developer issued bonds to close the $6 million shortfall for the project, and the debt is owned by the developer rather than the city. When the hotel is open, the bonds will be repaid through sales tax revenue the hotel generates.

"The [Tourism Development Financing Program] is a fantastic use of state tax dollars to benefit our community, and it gives us another incentive tool that offers almost no risk to use—the City’s obligation to use tax revenue generated by this hotel only kicks in once the hotel actually opens for business," said Landrum via an email. "Put another way, the City contribution is generated only from actual dollars spent at the hotel — so by visitors to our city, not our residents or businesses."

Because the Tourism Development Financing Program is designed to bring hotels and other catalysts to tourism zones, it required the creation of a tourism zone within Alexandria. Landrum said the economic development partnership is exploring if tourism zones can be used to benefit other potential projects as well as Alexandria businesses.

In January, Alexandria City Council voted 4-3 to provide gap funding and create a tourism zone. The approval allowed Alexandria's economic development officials to proceeds with a Tourism Development Financing Program application to the state. The Alexandria Economic Development Partnership and Visit Alexandria collaborated on the application, documenting that Alexandria had no hotels serving a specific demographic, which made it lose visitors to Maryland and DC, and that Alexandria lost hotel inventory through some recent hotel conversions.

The project will bring back tax revenue to the site that was once the George Mason Hotel from 1926 to 1972. The National Center for Missing and Exploited Children occupied the building in 1998, but it had a federal tax exemption and did not generate city tax revenue. In 2017, the National Center for Missing and Exploited Children decided to sell the building and leased space until it relocated to the Carlyle neighborhood.