When developer Stephen Wendell of Mountain Shore Properties sizes up a location for his next project, he looks for a city on the rise — the next Austin or Nashville.
“Our background allows us to see a city and maybe see it a little better than its locals can because they have a biased lens,” Wendell said, adding that his company has built hotels in 11 different states.
Wendell fell in love with Louisville, Kentucky, so much, he took a leap of faith in the middle of the pandemic and bought a 0.5-acre downtown lot, partnered with Bunkhouse Hotels and built the $33.25 million, 122-room Hotel Genevieve.
“When I came here it was very apparent this area of the city is going to grow and the city is going to continue to do well,” Wendell said. “I knew if we got it open, we’d be several years ahead of the competition. Now three hotel companies have announced they’re building hotels downtown.
“I’m not saying Louisville is going to be Nashville or Austin, but it will continue to grow in that way. As those cities become more expensive to live in, people will come down to Louisville. … The city feels very overlooked and underrated and I don’t think that’s going to be the case for very long.”
Wendell has the data and evidence to back it up, from the diverse population that’s 1 million strong, to being the home of the University of Louisville, to the MLS soccer team, to the $100+ million convention center renovation, to its reputation of being a “middle ground city” that isn’t too polarized in today’s often toxic political climate.
And, of course, there’s the Kentucky Derby at Churchill Downs and the bourbon, which are built-in draws.
“Churchill Downs is the horse in the room, and Derby week is a humongous portion of the city’s business,” said Wendell, who added they moved heaven and earth to ensure the hotel opened just before Derby week.
The hotel is unique by Bunkhouse standards and draws on local character, from the design and decor to the employees. There’s a bar, a ground-floor restaurant, a speakeasy and a sort of minibar that Wendell calls “a bodega put through an Andy Warhol filter.”
The developer and Bunkhouse also worked with the city, creating a hospitality school to train workers, regardless of whether they worked at Hotel Genevieve or a competitor.
“We got amazing attendance,” Wendell said. “We got our head housekeeper in this thing, and she’s unbelievable. She brought a whole crew of people she knew wanted to do it.”
Wendell said overall, it’s as tough a market as he’s seen as a developer.
“Pricing for everything is very high,” he said. “We’re too high from a development perspective. None of the potential projects pencil with positive leverage. Anyone else telling you something different is lying.
“Some people do deals and bank on a refi at a lower rate somewhere down the line,” he said. “It feels like we’ve gotten to the top where rates are and things are cooling down. To get your numbers to work today on a pro forma is tougher than it’s ever been. You just have to stay disciplined and continue to not push.”
With that said, he’s already identified the next big city for a project: Chattanooga.