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Growing Fort Bragg Creates Hotel Building Boom in Fayetteville, North Carolina;
Hotel Demand is Outpacing States Other Large Metropolitan Areas

By Andrew Barksdale, The Fayetteville Observer, N.C.McClatchy-Tribune Regional News

March 23, 2011--Finding a hotel room in a popular part of Fayetteville can seem impossible.

Many of the city's newer hotels -- especially around Cross Creek Mall -- stay nearly booked. And if you need a block of rooms at the last minute, good luck.

Since 2005, Cumberland County's supply of hotel rooms has grown about 12 percent. But demand for rooms has surged nearly twice as much, leading to a recent construction boom including the $30 million Embassy Suites going up near the mall.

The Fayetteville Observer analyzed five years of data from Smith Travel Research, a hotel performance research firm in Tennessee. The results show Fayetteville's hotel and motel industry has far outpaced North Carolina's other large metropolitan areas -- Raleigh, Charlotte, Greensboro and Durham.

Demand for Fayetteville-area rooms grew by 23 percent from 2005 to 2010, and overall lodging revenue was up 50 percent to more than $96 million.

By comparison, demand in Raleigh grew 7.6 percent over the same period. Charlotte hotel bookings grew by less than 2 percent.

And while average occupancy rates of Fayetteville hotels has increased in five years, it has dropped in Charlotte, Raleigh, Greensboro and Durham.

Fort Bragg is the main economic engine driving the growth, said Pam Sise, president of the Fayetteville Area Hospitality Association. Soldiers, Department of Defense civilian employees and government contractors are filling up hotels, she said.

Chintan Patel, a consultant for four Fayetteville hotels including Knights Inn and Baymont Inn & Suites, said some companies are buying blocks of rooms. Their employees are staying five to seven days at a time, too.

"The majority is still government contracts to work at Fort Bragg or some big construction company," Patel said.

The return of thousands of soldiers from overseas last year and the steady buildup of Fort Bragg have not only crammed hotels but roads and restaurants, too. The families that greet returning soldiers needed somewhere to stay and eat.

Fort Bragg has been expanding under the Base Closure and Realignment Act of 2005. The Army is relocating the Forces Command and Reserve Command from Atlanta to Fort Bragg by September.

All of the military activity has made finding a room around Cross Creek Mall difficult.

Sise said the hotels around the mall are exceeding 90 percent occupancy. The abundance of restaurants and shopping around the mall are spurring the demand.

Sise manages the Residence Inn by Marriott and the TownPlace Suites by Marriott, both on Skibo Road. The two hotels were about 95 percent full last year, and revenues were up 30 percent, she said.

According to Smith Travel Research, the average occupancy in Cumberland County climbed to 67 percent last year from 61 percent in 2005. Hotels and motels fetched on average almost $70 a night last year -- up 22 percent during that time, though still below average rates in the other N.C. metros.

To meet ever-growing demand, six hotels in Cumberland County have opened in the past two years, and ground will be broken on three more this year, said John Meroski, president of the Fayetteville Area Convention & Visitors Bureau. They are a Courtyard and Candlewood Suites in Spring Lake, and a Holiday Inn near the mall.

He said the federal government about two years ago raised the per diem to $92 from $60 that employees could spend on lodging. They couldn't find places around the mall with the old rate, Meroski said.

The higher rate has increased lodging demand around Fort Bragg and allowed some owners to renovate their rooms and build more. The Embassy Suites and convention center under construction on Lake Valley Drive could not have been built with the older rate, Meroski said.

The city last year awarded more than $400,000 in incentives for the Embassy Suites.

Demand for extended-stay lodging with roomier suites is also high. Places such as Home2 Suites by Hilton on Sycamore Dairy Road and Candlewood Suites on Legend Avenue have recently opened.

Overall, there are 71 hotels and motels with a combined 5,974 rooms across the county.

All of the hotel expansion has some people worried about a potential glut that could lower occupancy rates and depress rental rates, especially after construction on Fort Bragg ebbs in a few years.

Patel, a member of visitors bureau's board, said the market is close to being overbuilt now. Sise said smaller or older properties would feel the squeeze first because guests like going to newer hotels.

Occupancy peaked last year at 74.8 percent in October, but dropped to 57 percent by December. The average rate was back up to 68 percent last month, however.

Meroski said occupancy rates plummeted by 40 percent in the mid-1990s when several hotels opened at the Cedar Creek Road, Exit 49 on Interstate 95.

"I don't think we are going to have that kind of drastic approach in the next couple of years, but I do think there will be some market shifting," he said.

Meroski said better planning can avert a financial burden on the industry. More thought in the type and location of hotels will be needed in the future, he said.

Staff writer Andrew Barksdale can be reached at barksdalea@fayobserver.com or 486-3565.

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To see more of The Fayetteville Observer, or to subscribe to the newspaper, go to http://www.fayettevillenc.com/.

Copyright (c) 2011, The Fayetteville Observer, N.C.

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



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