That really is a great location for hotels and condos: it's right where 3 major neighborhoods meet - downtown, belltown and the denny triangle; it's just a couple blocks from Westlake center; it's just a couple blocks from the end of SLUT, the monorail, and a major Link station; right next door to a couple Tom Douglas restaurants; just a few blocks from Amazon; only 5 blocks from the Market. This is where tourists want to be. It increasingly feels like New York City, but with easy access to the big Seattle landmarks.
You don't consider Belltown and Denny Triangle part of downtown? They are almost always considered a part of it. Maybe by 'downtown', you mean the 'Retail Core'? (What a stupid name.)