A Hotel Development Overlay District[1] ("HDO") was created in the City of Savannah in 2018 to manage hotel concentration and introduce a higher level of review for hotel developments. Over time, the HDO has been amended to meet the needs of the changing community. In 2025, the city initiated a new Hotel Overlay Expansion Study (the “2025 Study”) after receiving repeated petitions from residents of the Victorian District, Thomas Square, and Cuyler-Brownville neighborhood associations who were concerned about rising land values, the loss of affordable housing, and the incompatibility of hotel development within the residential fabric of these communities.

The purpose of the study was to evaluate whether the HDO should be extended and, if so, under what conditions.

The study produced several recommendations, which include the following:

• Expand the existing HDO to encompass the Victorian, Streetcar, and Cuyler-Brownville Historic Districts.

• Limit hotels within the expanded district in one of the following ways:
  • Option 1: Within the expanded HDO District, hotels with 40 rooms or less would be permitted as a Special Use in all TC-1 and TC-2 (Traditional Commercial) zoning districts.
  • Option 2: Within the expanded HDO District, hotels with 40 rooms or less would be permitted as a Special Use in designated areas limited to properties facing Anderson and Henry streets between Whitaker and Drayton streets. All of these parcels are zoned TC-2, except for one parcel, which is zoned TC-1.
  • Option 3: Within the expanded HDO District, no hotels would be permitted.

• Add use conditions, including requiring that all hotels and motels be limited to 16 to 40 rooms and be a part of mixed use development.

The City of Savannah Planning and Urban Design staff presented the 2025 Study findings and recommendations to the Savannah Metropolitan Planning Commission (“MPC”) on August 26, 2025. The Commission anticipated reviewing the proposals at its September 16, 2025 meeting; however, the HDO text amendment does not appear among the recorded votes or action items in the published minutes, and the matter is now listed on the agenda for October 7, 2025.

Impact on Developers

Often hotel developments face a maze of zoning approvals, permits, and environmental reviews. While it is uncertain what the Commission will ultimately decide, the expansion of Savannah’s HDO, as proposed, can potentially add risks to the standard challenges hotel developers face in Savannah. A brief analysis of how an expanded HDO impacts these risks follows.

Zoning Approvals: Use restrictions that limit hotel operations or require conditional approvals are a common zoning challenge.

Option 1 of the recommendations for the proposed expansion, which would allow small hotels as a Special Use in Traditional Commercial-1 (“TC-1”) and TC-2, keeps small hotels theoretically viable throughout the expansion area, but every project will need to clear a Special Use approval process, which goes through the Planning Commission, the Mayor and the Aldermen. That process creates heightened risk of denial if neighborhoods organize opposition. According to the study, 69+ vacant parcels were identified in the HDO, which means that Developers gain more opportunities, but each one carries uncertainty.

Option 2 narrows the available parcels considerably by allowing small hotels as a Special Use only for some properties facing Anderson and Henry streets. Only a small band of parcels (largely TC-2, some TC-1) would be eligible. Developers outside this strip face a de facto prohibition. This reduces speculative site assembly but creates predictable hot spots where hotel demand concentrates.

Under Option 3, zoning approvals would effectively be foreclosed in the expansion area. Developers with holdings in the Victorian, Streetcar, or Cuyler-Brownville districts would have no pathway, regardless of scale.

Permitting & Design Compliance: Permitting presents another common challenge for developers in the hospitality space.

Option 1 of the MPC’s recommendation keeps the Special Use requirement throughout the proposed expansion area, which means full review as a Special Use plus compliance with historic overlay design standards via Certificates of Appropriateness (“COA”) from the Preservation Commission. The combination of political approval and design compliance makes entitlements both lengthy and uncertain.

Option 2 streamlines the map of eligible parcels, but those parcels still face the same challenge: Special Use + COA + parking/site standards. The limited geography may also amplify community scrutiny because opposition can focus on a smaller number of sites.

Option 3 eliminates this category of permitting altogether for new hotels, since applications would not be considered. Only adaptive reuse of existing, legally operating hotels (if grandfathered) might move forward.

Environmental: Even with zoning and permits in place, environmental regulations can unexpectedly stall hotel projects—or increase costs dramatically. Thankfully, the HDO is not likely to impact a developer’s ability to obtain environmental approvals.

The bottom line analysis: Option 1 maximizes developer opportunity but embeds the highest uncertainty in zoning approvals and permitting, since each project must run the full political and + design approval. Option 2 narrows the map of risk — still uncertain, but concentrated — and arguably strengthens neighborhood opposition because the fight is focused. Option 3 effectively resolves zoning and permitting risk for hotels by removing them from the equation, but shifts development pressure toward other permitted uses.

The HDO marked a pivotal shift in how Savannah regulated its tourism economy. The good news is that hotel development is alive and well in downtown Savannah. Since the adoption of the HDO, hotel development has remained active in that area. As of October 2023, the area included 32 large hotels and 17 small hotels. By December 2024, construction was underway on one small hotel and two additional large hotels, with another ten projects under review. Collectively, these developments could add more than 1,500 rooms to the downtown market, underscoring that the HDO has guided—not stopped—new construction. Future changes to the overlay district will continue to shape both the pace and the form of hotel growth in downtown Savannah.

If you are planning a hotel project, now is the time to address the legal checkpoints ahead. Careful planning at the front end can reduce risk and improve the likelihood that a project proceeds smoothly from concept to completion.

[1] An overlay district is a zoning mechanism that applies an additional layer of rules to a designated area, sitting on top of the existing “base” zoning. While the base zoning still governs land use in general terms—residential, commercial, mixed-use—the overlay adds tailored restrictions or incentives to address issues unique to a particular location such as protecting neighborhood character, managing growth, and balancing land use conflicts.