August 1, 2008 - A glut of new hotel rooms, a sluggish economy and fewer people staying in Boise hotels haven't stopped two potentially high-profile Downtown projects.

Both hotel proposals capitalize on a new trend of mixing higher-end hotels with other commercial endeavors.

Boise officials are looking over plans for a new hotel and convention center Downtown and a plan that would combine the proposed upscale grocery store Whole Foods on Broadway and Myrtle with a boutique hotel called aloft -- the name isn't capitalized and is pronounced "AY-loft" -- part of a chain run by the people who own the chic and swanky W hotels. The company, Starwood Hotels, wouldn't discuss any plans to come to Boise, but city documents detail the aloft proposal.

Both projects are delayed from their original timelines, but both appear to be gaining momentum again.

NEW HOTEL ROOMS OUTPACING DEMAND

From 2006 to 2007, there was a 10.1 percent jump in the supply of hotel rooms in the Boise metropolitan area, said Chad Church, manager of industry research for Smith Travel Research in Tennessee.

"That's a pretty big jump, to be quite honest," Church said. "The entire U.S. supply is growing, but not at that pace."

By comparison, the eight-state mountain region grew by just 1.3 percent from November 2006 to November 2007.

"It looks like they brought a ton of stuff on line all at once (in the Treasure Valley). What you are seeing now are projects coming on line started a year and a half ago," Church said.

Meanwhile, the overall demand for Boise hotel rooms is down by 1.6 percent compared with last year, Church said.

"That's not as terrible as other markets, which are seeing double-digit downturns," he said.

HOTELIERS STILL SEE POTENTIAL IN BOISE

Hotel building and the hotel business are cyclical, said Pat Rice, general manager of the Greater Boise Auditorium District, which is funded with hotel room taxes. As Boise's economy heated up, rumors of hotels popped up all over the Treasure Valley. Some were built, others are still languishing in the planning process, and many never materialized.

When several large Boise-based corporations -- including Albertsons and Washington Group International -- were sold to out-of-state interests, visiting business customers became scarcer. Still, many hoteliers know the Boise market will pick up again, Rice said.

International travelers can cause huge upswings in hotel occupancies in "primary" markets like Los Angeles, New York and Chicago, Rice said. So when the economy suffers, those hotel markets take big-time hits. Boise, though, doesn't get those swings.

"We don't see those big spikes. And when those big primary markets get hammered, we don't see that as much," Rice said. "Nobody builds for the short-term."

"That's why John Q. Hammons sees long-term potential in the marketplace," he said, referring to the Missouri hotelier connected to the proposed convention center and hotel. His company owns more than 70 Marriotts, Embassy Suites and other hotels.

Developers are turning to combo projects to make money, said Jeff Higley, communications director for Smith Travel Research.

The trend to combine hotels with mixed-use development has been popular during the past five years as a way to finance the hotels. Having built-in generators of hotel-room demand, such as office space or retail space, is a good way to market the hotel, he said.

While developers can obtain money for stand-alone hotels, they tend to be of the limited-service mid-scale variety, such as Hampton Inn and Comfort Inn, Higley said.

CONVENTION CENTER PLAN IS MOVING ALONG

Hammons came to Boise recently to look over the financing options for the hotel/convention center project, Rice said.

"I can confirm he was here. I can confirm he was looking at financing options. That truly was the extent of his visit," Rice said. "Boise has pent-up demand for more convention center space. Any larger convention facility needs a larger full-service hotel facility in close proximity."

The Auditorium District operates the Boise Centre on The Grove. For years, local business leaders have pushed for a larger convention center to attract larger events and regional conferences. The district owns five acres between 11th and 13th streets and Myrtle and Front streets, purchased from a Simplot family trust. The site had sat empty for years as bond measures and private development deals for the proposed center fell apart.

Hammons and Boise's Oppenheimer Development teamed up last year with a plan to build a convention center and 250-room hotel complex and lease it back to the district.

City officials have seen plans for the project, but the drawings have not been publicly released. Neither Hammons nor Oppenheimer officials returned several telephone calls this week.

The Auditorium District would make lease payments from the 5 percent room tax collected on the district's roughly 5,200 hotel rooms. The tax generated about $4.4 million in fiscal year 2007, district officials said.

Kathleen Kreller: 377-6418

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