|By Doug Smith, The Charlotte Observer,
Knight Ridder/Tribune Business News
Feb. 27, 2006 - Question of the Week
Charlotte is experiencing a mini-boom in hotel development, with three additional properties expected to open uptown by late 2008.
In a lodging market still recovering from a business travel slump following 9-11, you have to wonder: Are we looking at oversupply?
The experts most familiar with supply and demand in the Charlotte area don't think so.
The new hotels are coming just as occupancy and room rates are nearing levels industry leaders say will return a reasonable profit.
And, they point out, the new brands will focus on underserved needs, from luxury suites for top-level business executives to loft-like rooms for hip young professionals.
As full service properties, they'll also include restaurants, lounges, fitness centers and services ranging from dinner delivered to the door to valet parking.
The extra rooms -- 476 added to a stock of around 30,000 in the area -- could lead to more business for everyone, boosting Charlotte area occupancy and room rates.
"Full service hotels like these are demand generators," said Mike Butts, executive director of Visit Charlotte.
Jim Diehl, general manager of the Marriott City hotel, said, "I'm pretty positive about it. I think it will raise the bar for everybody."
For him, it's "Like a blip on the radar screen," he said. "These are niche players."
Announced projects include:
Chetrit Group is converting one of the Adam's Mark's two towers on McDowell Street to a 308-room Blake Hotel geared to "a hip, professional clientele."
The hotel's remaining 305 rooms are off the market while the owner decides what to do with the second tower.
If those rooms stay out the mix as some lodging insiders speculate, the reduction will help offset the 476 rooms to be added.
"It's not like someone is dropping a big 500-room hotel on us at once," said Mohammad Jenatian, executive president of the Greater Charlotte Hospitality & Tourism Alliance.
"The bottom line is this is definitely great for our business," he said. "You have a collection of new and upscale products added to the city's accommodations package."
Jenatian also believes the new hotels will encourage existing properties to upgrade and pressure the Charlotte Regional Visitors Authority to bring in more convention and tourism business.
Butts said the full-service rooms will help balance out an oversupply of limited-service rooms caused by a late 1990s building spree.
"Less than 50 percent of our rooms are full service," he said. "When that happens, the average rate in your community will be suppressed."
In other cities, Butts said, full-service rooms typically account for 60 percent of the market.
Check out these local industry facts
-- Average daily occupancy for the 30,000-plus rooms in the Charlotte MSA (Anson, Cabarrus, Gaston, Mecklenburg and Union counties) rose to just over 60 percent in 2005 from about 55 percent in 2004.
-- The average daily room rate rose to $67.02 from $64.62 in the same period.
That's the highest since 1999 in both categories, said Mike Butts, executive director of Visit Charlotte.
-- The local industry is aiming for at least 65 percent occupancy and a $75 daily rate this year, said Mohammad Jenatian, executive president of the Greater Charlotte Hospitality & Tourism Alliance.
That's a level where operators can make a reasonable profit and still have money to invest in capital improvements, he said. Doug
Doug Smith: (704) 358-5174; firstname.lastname@example.org
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