Columbia-based Costello Construction has made its name by building a plethora of commercial structures: office projects, parking garages, fitness facilities, libraries and/or some combination thereof … you name it. Costello even built much of Merriweather Post Pavilion.
However, the company had never built a hotel. That meant that it took some intestinal fortitude for President David Costello to buy six acres on the Lakefront and invest $30 million in not only reinvigorating the former Sheraton Downtown Columbia Hotel, but also make it worthy of Marriott’s Autograph Collection, which is just the second such edifice in Maryland.
As it’s happened, the risk to open what is now known as the Merriweather Lakehouse has proven a revelation. “I didn’t want to build a hotel on the site. I really wanted the land for a mixed-use project. The hotel was ancillary. However, I knew it had to stay,” Costello said. “But once I bought it, I liked the idea of having a nice hotel for Downtown Columbia.”
In an added twist, Costello’s plans to build a mixed-use project on the north side of the property are still in motion; however, they’re on hold due to a lawsuit the company filed against The Howard Hughes Corp.
Costello already owned the office building on the south side of the Lakehouse and, with local developer Kingdon Gould, Jr., built Little Patuxent Square (which fronts to Little Patuxent Parkway and is address of GrillMarx). The hotel property, which has also operated as the Cross Keys Inn and The Columbia Inn until more recent times as the Sheraton, is more than four decades old.
“That means I’ve witnessed its evolution, as well as its deterioration,” he said, “so our new place was a complete gut job.”
But long before the Lakehouse opened on Nov. 17, 2021, Costello had some selling to do.
“The first thing I had to do was persuade Marriott that we were worthy of an Autograph franchise. It’s the corporation’s most popular brand and they’re protective of it,” he said. “So we had to assure quality of the facility for their standards with that $30 million investment, then convince them that our market would support it.”
Four-star accommodations also mean, of course, “that the rooms are more expensive. We have to charge a four-star price (for the last two weeks of March, prices ranged from $204 for a weekend night to $274 for a weekday), so that’s a new market here. There are 212 rooms under the new design, with 72 having been added after the Cross Keys rooms were shuttered.
So far, the returns have been mixed as world continues to work its way out of the COVID-19 pandemic. “We have not yet been able to gain the number of visitors we had hoped,” Costello said. “About 65-70% occupancy was the target, but thus far it’s been about 45%. But the winter months are typically slow.”
However, he’s remaining optimistic. “We want to see solid April numbers,” he said, “and we’re hopeful of reaching 70% by this summer.”
Costello is also eager to bring a new use to the old four-acre Cross Keys Inn site on the north side of the six-acre property. But as his expensive mixed-use project started gaining traction, they came to a sudden halt.
“After we spent $2 million designing an elaborate mixed-use plan,” he said, “The Howard Hughes Corp., which had been working with us, stopped it.”
Stopping it resulting in Costello filing a lawsuit against HHC, which opted not to offer comment about the litigation for this story.
“So our plan as of today,” Costello said, “is to have our litigation with Howard Hughes run its course then proceed with our plans to update the Cross Keys Inn site.”
As he looks ahead, despite the lack of the desired amount of business to date, Costello said he’s “always had an outstanding rapport with Marriott. They were never concerned about my lack of time in hotel industry.”
The sentiment was echoed from the corporation’s Bethesda headquarters. “The Merriweather Lakehouse Hotel project was a great addition to the Marriott Autograph Collection,” said Richard Veilleux, area vice president, full-service, franchising for Marriott International.
“The ownership had an amazing vision for the hotel from the beginning. David and I, and our respective teams, enjoyed a very close and collaborative friendship throughout the process. That partnership played a vital role in bringing the vision to life,” said Veilleux. “We look forward to continuing to work with the Merriweather team as they present guests with exceptional experiences.”
So for Costello, the project represents a new step forward.
Marriott “gave us more creative leeway than they have historically offered a builder,” he said. “I promised them something that exceeded the Autograph brand and I think we’ve delivered.”