Room for more hotels?
Daily Journal of Commerce
by Alison Ryan
A proposal for a new downtown hotel showed up last week on the city’s public meetings schedule. Portland could use another, industry sources say – but success of any new venture would depend on what type of hotel developers plan.
Fountain Village Development Co. and Sage Hospitality Resources propose a new hotel complex at Southwest Sixth Avenue and Oak Street that would involve renovations of and a three-story addition to a 13-story office building at 300 S.W. Sixth Ave. The project also would replace an existing three-story building at 521 S.W. Stark St. The new complex would house 256 hotel units and a ground-floor restaurant.
Hotel industry sources say success of the project, which is scheduled for design advice from the city of Portland’s Design Commission on April 19, will depend on what type of hotel Fountain Village and Sage slate for the space. Neither company could be reached for comment Tuesday.
In the upscale luxury market, said Aaron Babbie, corporate director of sales and marketing for Provenance Hotels, Portland doesn’t have a lot of room. The Nines, a luxury 330-room hotel atop the historic Meier & Frank building in downtown Portland, is scheduled to open in 2008 – and that, Babbie said, would pretty well fill the market.
“From a demand standpoint, we think there’s about 330 rooms left of new, needed demand,” said Babbie, whose Provenance Hotels owns and operates Hotel Lucia and Hotel Deluxe, said.
The central city hotel market, which includes 26 hotels, is strong – thanks in part, Portland Oregon Visitors Association officials say, to the city’s reputation. Vacation guide Frommer’s named Portland one of the world’s top travel destinations for 2007. The Food Network this month will name Portland the country’s best eating destination. And the city’s picked up other superlatives from magazines such as Men’s Journal and Cooking Light.
“All those things sink into people’s minds,” said Deborah Wakefield, spokeswoman for the Portland Oregon Visitors Association, “and when they’re thinking about places to visit, it doesn’t hurt to have good PR.”
Numbers back the word-of-mouth buzz. Year-end hotel occupancy figures for the central city, which includes the Lloyd District, are strong – 74.6 percent, according to Smith Travel Research, an industry data provider. Year-to-date numbers for 2007 are also up, with the 63.9 percent central city figure a 2.2 percent increase from 2006. The national occupancy rate for January through November 2006 was 64.6 percent.
“There is room in the market for another hotel, and maybe two more hotels, depending on project type,” said hotel broker Ed Dundon of the Dundon Co., who has brokered the sale of downtown hotels such as the Heathman Hotel and the Governor Hotel.
More hotels are opening or in the works. The Nines is scheduled to open in 2008. The Ace Hotel, which caters to creatives on a budget with an eclectic vintage vibe and rates starting at $95, opened its doors in February. And plans for a Headquarters Hotel near the Oregon Convention Center are rolling forward, said Scott Langley, president of developer Ashforth Pacific, with a kickoff meeting between new project manager Metro and the development teams scheduled in the next few weeks. And, Langley said, he sees room for all.
“My sense of the HQ hotel and this proposed hotel is they’re apples and oranges,” he said. “The HQ hotel caters to a totally different market.”
The hotel market is good, Dundon said. But it’s also, he said, very difficult to build hotels downtown. The challenge has been, he said, the cost of construction versus market rates, as well as property costs.
“There’s not a ton of opportunity,” he said. “A developer has to be selective on what he’s building, where he’s building, and what kind of product.”