The 1960s-era Canal Street Hotel downtown sold this week for $4.8 million to a group that includes French Quarter hotelier Michael Valentino.
The red brick, shuttered hotel at Canal Street and South Claiborne Avenue once operated as a Days Inn and later as an independent brand under owners Letap Hospitality of Atlanta, which bought the property for $6 million in 2014.
Valentino said Friday that the 225-room hotel will undergo a "significant upgrade" and rebranding, either under a national flag or an independent brand. The decision to invest in the property was driven by the new $2 billion medical complex with a regional Veterans Affairs hospital and University Medical Center nearby, he said.
His investment partners in the deal include Eva Hotard and Eric Hotard, whose family founded the Hotard commercial bus company.
The development team expects the hospitals to generate business during the weekdays, while getting customers from French Quarter and Central Business District visitors on the weekends, he said.
"Our development confidence is solely based in our confidence in the future of the LSU-VA hospital complex," he said.
He expects construction to begin next year and the hotel to open in early 2017. The hotel got its start as the Governor House Motor Hotel, but Valentino says they won't be returning to that name.
Valentino owns French Market Inn, Prince Conti Hotel, Hotel St. Marie, Place d'Armes Hotel and Lafayette Hotel and redeveloped the Basin Street Station visitors center.
The hotel at 1630 Canal St. is in an area of downtown that has lagged behind the rest of the Central Business District's real estate boom, but it is beginning too see new signs of interest from developers.
Next door to the hotel, the University of New Orleans office tower, which was for sale for $6 million, was recently listed as under contract to buyer, although a final sale hasn't been posted.
A couple of blocks away, the shuttered Jung Hotel is being restored in a $100 million renovation. Meanwhile, the state-owned old Charity Hospital on Tulane Avenue is being pursued by developers for a mixed-use project.
Meanwhile, a vacant office building across from the hospitals on Canal has been targeted by developers for a new hotel.
The city of New Orleans had moved to seize the Canal Street Hotel earlier this month for more than $416,000 in unpaid property taxes, according to court records.