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Tacoma, Washington's Hotel Inventory About to Grow with Seven Hotels
in Planning or Development Stages

By John Gillie, The News Tribune, Tacoma, Wash.McClatchy-Tribune Regional News

Feb. 06, 2011--Is the movie motto, "If you build it, they will come," just about Iowa cornfields and baseball games, or does it have a real life application in Pierce County's hospitality industry?

A corps of would-be hotel developers may soon be finding out.

A wave of new hotel construction is in the wings for Pierce County with seven hotels in either the planning or early construction stages.

If they all are built, they have the potential of adding hundreds of rooms to Pierce County's hotel inventory. Those new hotels could translate into dozens of construction and hotel worker jobs and better business prospects for the Greater Tacoma Convention and Trade Center and the Puyallup Fair & Event Center.

ROOM DEMAND

Among that list of seven, two of the hotels are under construction and three others have reached the advanced design stage. They appear reasonably certain to begin construction this year. The developer of the sixth hotel is still committed to its construction, but groundbreaking is more distant. The seventh hotel, once a glittering promise, now appears a remote possibility.

Why the interest in adding to Pierce County's hotel inventory? Developers say they think their new properties will fill unmet gaps in the local hotel business profile.

The president and CEO of the Tacoma Regional Convention and Visitors Bureau, Tammy Blount, agrees.

"Is there a demand for more hotel rooms in Pierce County?" asked Blount. "The short answer is yes.

"The longer answer is that it depends on the product mix," she said. "We need a variety of hotels at different prices and with different levels of service. There is easily room for 500 more rooms."

Average hotel occupancy in the county is 65 to 70 percent with room occupancy falling to the mid 40s percents in December and rising to the 80s in July, according to a consultant report done for the bureau.

That occupancy is up from 2009, and room costs are gradually rising.

But is that occupancy rate high enough to justify a wave of new hotel construction? Blount said that it depends on who you ask.

Ask an existing hotel owner, and he's likely to say no, not until his hotel is full every day of the year, she said. Ask a developer, and they'll likely talk about the opportunities for growing the market.

PUYALLUP TO THE FOSS

Will the hotels on Pierce County's plate fit those needs? Consider the hotels now in construction or in advanced planning stages.

Two hotels near Puyallup's MultiCare Good Samaritan Hospital are under construction. Collectively the Hampton Inn and the Fairfield Inn and Suites will add more than 200 rooms to the local room count.

Developers' interest there was spurred by two nearby business magnets, the Puyallup Fair & Events Center and the new $400 million MultiCare Good Samaritan Hospital due to open this month.

Bellingham's Hollander Investments, which already owns two Puyallup hotels, is the owner of the new Fairfield Inn.

Company principal Mark Hollander said the company's lengthy Puyallup history helps him keep a close watch on the local market. "We think there's a good market there for a new property or we wouldn't be under construction," he said.

Hollander wants to build yet another hotel in Pierce County, this one on downtown Tacoma's Foss Waterway. Hollander has been working on that project since 2009, when it signed a purchase and sale agreement for a tract on the waterway's west side between the Thea's Landing and Esplanade condominium projects.

Hollander's project, part of a U-shaped mixed-use building, would house a Marriott Residence Inn on the tract. But the Hollander project there incurred the enmity of downtown Tacoma's largest hotel owner, the Hotel Murano's Gordon Sondland. Sondland allied himself with a hotel workers union to oppose Hollander's project.

They succeeded in getting the building delayed for months while the Tacoma City Council debated whether to approve an agreement to indemnify Hollander from environmental problems pre-existing on the formerly city-owned site. The union wanted Hollander not to oppose their organizing the new hotel as a union establishment, and Sondland complained that Hollander hadn't made rooms in its other downtown hotel near the convention center available for convention booking. Some City Council members complained that the fairly plain Marriott Residence Inn Hollander planned for the waterfront site wasn't suitable for that unique location.

A year ago, the council approved the environmental agreement, but the Murano appealed the state's issuance of a shoreline permit to Hollander. The Murano lost but asked for reconsideration. That ruling again favored Hollander. The Murano has appealed that decision to the Thurston County Superior Court, and Hollander asked to take the issue directly to the State Court of Appeals. That court is expected to consider the appeal next month.

Hollander says downtown lacks the longer-stay sort of property that the Marriott will bring to Tacoma. The new Foss Waterway hotel won't be competing with the Murano, which is aimed at a different market.

UPTOWN, DOWNTOWN

Meanwhile, south of the Convention Center near the old Heidelberg Brewery, Seattle's Hotel Concepts stands ready to begin construction of a new Holiday Inn Express. That 163-room property could begin construction as soon as next month, said Hotel Concepts principal Han Kim. The developer is waiting for building and demolition permits from the city. If work begins in March, the hotel could open in the summer of 2012.

Why add another hotel to the downtown area?

"The surrounding hotels are doing fairly well," said Kim. "We'll bring a different sort of property to the area."

The prices at the Holiday Inn Express, about $100 a night, will be less than the Murano or the Marriott, he said. The hotel consequently will have fewer amenities than those two hotels. Kim and his partners have been planning the hotel for more than two years, but questions about its design delayed its approval by the city Landmarks Preservation Commission.

At downtown's northern border, Oregon's McMenamins hotel chain plans yet another sort of property. The McMenamin brothers have bought one of Tacoma's iconic landmarks, the former Elks Temple, and plan to turn it into a performance venue, pub and hotel. The 100 hotel rooms will be in a connected apartment structure.

Work on the McMenamins could begin this summer.

Meanwhile, a project dear to the hearts of many Tacomans, the resurrection of the once-grand Winthrop Hotel across South Ninth Street from the Pantages Center for the Performing Arts, appears to be dead in the water.

That 1925-vintage hotel, once noted for its Crystal Ballroom and roof garden, has served as low-income housing since 1972. The present owner, Tacoma's Prium Cos., appeared as a white knight for the hotel in 2006, promising to relocate the residents and return the hotel to its former glory.

The City of Tacoma granted Prium a $2 million loan to help buy the old hotel, with development benchmarks to ensure Prium made good on its promises.

Prium planned to build low-income housing on a tract it would buy from the city near South 34th Street and Pacific Avenue, but that plan stalled when financing evaporated in the recession, said Martha Anderson, deputy director of the city's Department of Planning and Economic Development.

That $2 million interest-only loan is due next January, but the prospects of it being paid are dim, she said. The two principals in Prium who made personal financial guarantees for the loan are now bankrupt, she said.

The city hopes it can find another developer interested in reviving the project. That could be difficult, she said, in the current economic climate and with the size of the debts secured by the building. In any case, unraveling the present financial deal could be daunting. Prium's other lender on the deal, the troubled Frontier Bank, has been subsumed by Union Bank.

SILVER LINING?

At the far north end of the Tacoma shoreline near Point Defiance park, another hotel plan is still alive but in limbo. Bellevue's Silver Cloud Inns has signed an agreement with the developers of the site of the former Asarco copper smelter to build a Silver Cloud Inn as part of the $1 billion Point Ruston mixed-use development. Development on that site has slowed to a crawl as home sales nationwide have diminished. Two condominium building projects have been stopped at the garage level, and the developer is still negotiating with the federal government for loan guarantees on apartment buildings on the site. Meanwhile the site's utility infrastructure is being built.

Point Ruston developer Mike Cohen said the Silver Cloud has extended its option on the hotel site, but has no firm date to commence construction.

John Gillie: 253-597-8663 john.gillie@thenewstribune.com

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To see more of The News Tribune, or to subscribe to the newspaper, go to http://www.TheNewsTribune.com.

Copyright (c) 2011, The News Tribune, Tacoma, Wash.

Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com. NYSE:MAR,


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