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Developers Preparing More than a Dozen Proposals
 for Hotels in the Seattle Area;  Too Much Too Soon?
By J. Martin McOmber, The Seattle Times
Knight Ridder/Tribune Business News

Dec. 8, 2004 - Hotels settled into a dreary slumber three years ago after a weakening economy and then terrorism and war put a damper on the travel industry.

Occupancy rates fell sharply. Rooms generated less revenue. Most operators hunkered down to wait out the downturn. A few simply checked out, including Seattle's beloved Camlin Hotel.

But during the past 12 months, the region's hotels have enjoyed something of surge in business, in some cases to levels not seen since 2001.

"The market is coming back," said Seattle hotel consultant Andy Olsen of The Chambers Group. "It is not necessarily strong, but it is coming back."

Developers have responded with more than a dozen hotel proposals that could add thousands of rooms to the region. Projects range from a 337-room Westin under construction in downtown Bellevue to an exclusive 150-room Four Seasons near Pike Place Market in Seattle.

But the flurry of activity has raised a question: Is it too much too soon?

The consensus among industry watchers is maybe. Much depends on how fast developers build their hotels and whether all the proposals dotting downtown Bellevue and Seattle become reality.

It's a subject much on the mind of David Thyer, president of RC Hedreen. The Seattle development company is angling to build its fifth Seattle hotel at Eighth Avenue and Olive Street. The proposed high-rise would combine a 343-room hotel with 170 condominiums.

"The market can stomach a little more product," Thyer said. "Just how robust it is and whether it can handle all the projects in the same time frame remains to be seen."

The building boom is under way. Four hotels are going up in downtown Seattle and Bellevue, including the 160-room Pan Pacific at Vulcan's 2200 Westlake project and the 120-room Hotel 1000 under construction at the former Warshal's Sporting Goods site on First Avenue.

Developers have announced or applied for building permits for nine other projects, the largest of which is a planned 400-room expansion of the Sheraton. Olsen figures not all of those hotels will be built.

"Seattle isn't overbuilt, it is overproposed," Olsen said. "When you have a market that is desirable, you get a lot of proposals, and sometimes it is done to prevent a competitor from going forward."

The jockeying for position heated up several weeks ago when a group of local investors, including former Mayor Paul Schell and businessman Tom Alberg, announced plans to build a new Four Seasons hotel in downtown Seattle.

The venerable chain left the city two years ago after losing its management contract for the historic Olympic Hotel to rival Fairmont Hotel & Resorts. To many observers, the loss of the Four Seasons highlighted the relatively small supply of five-star hotel operators in the city.

"The industry needs a market leader, someone to set the standard," Schell said. "The Four Seasons has set the standard everywhere they are at."

The hotel would no longer have the five-star market to itself. Both the Pan Pacific and Hotel 1000 will cater to the same upscale traveler. With the Fairmont holding on to the Olympic Hotel's traditional five-star status, the limited supply of super-luxury hotel rooms could quickly become a glut.

Schell isn't worried. He believes competition will be good not only for the hotels but also for the city's reputation among elite travelers.

"(The hotels) reinforce each other," he said. "It's like the three gas stations on the corner -- it makes it a great place to get gas."

-----To see more of The Seattle Times, or to subscribe to the newspaper, go to http://www.seattletimes.com.

(c) 2004, The Seattle Times. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

 
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