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Six Hotel Projects Underway in Downtown Buffalo, New York
will Add 500 Rooms to the Market

By Stephen Watson, The Buffalo News, N.Y.McClatchy-Tribune Regional News

Nov. 18, 2012--This should please Tom Brady's father: Some prominent area developers plan to build six hotels in downtown Buffalo over the next several years.

The burst of activity includes both the recently opened Hotel @ The Lafayette and the Lofts on Pearl and four other projects in development at the Tishman Building, the Curtiss Building, the Donovan State Office Building and the Webster block.

The new hotels would add more than 500 rooms to the local market, and business leaders say the developers' commitment of hundreds of millions of dollars to the projects is only the latest sign that people want to visit and stay over in downtown.

"If we become as excellent as we all have the potential of becoming, we're going to pull them in from Pittsburgh and Cleveland and Youngstown and Binghamton," said Earl Ketry, founder of Pearl Street Grill & Brewery, who developed the Lofts on Pearl hotel in the Webb Building. "I think what we need to do is get excited about Buffalo and not worry about whether there's too many hotels."

The recently opened or planned hotels are all part of mixed-use developments that include restaurants, retail stores, office space, banquet rooms and two ice rinks.

Five of the six involve the rehabilitation of a historically significant -- or at least old -- building, and most are receiving some form of taxpayer subsidy.

"It's more expensive than building new," said Mark E. Hamister, chairman and CEO of the Hamister Group, which plans to buy and renovate the Tishman Building on Lafayette Square. The project includes a Hilton Garden Inn and has received $1.57 million in sales and mortgage recording tax savings from the Erie County Industrial Development Agency.

The developers, city officials and people with long experience in the hospitality industry say downtown Buffalo should absorb the extra room inventory.

But some observers wonder whether the influx of rooms will take business away from older hotels downtown or the suburbs. And they say the city still will be left without the kind of hotel needed to bring in larger conventions and meetings.

Hotels downtown had an average occupancy rate of 67 percent for 2011, besting the 59.9 percent for hotels nationally, according to Visit Buffalo Niagara and STR. Downtown hotels charged an average daily rate of $104.12 last year, above the national $101.80, they reported.

"That shows a hotel industry that is vibrant in downtown Buffalo," said Gary D. Praetzel, dean of Niagara University's College of Hospitality and Tourism Management.

Before the Hotel @ The Lafayette opened this spring, downtown boasted 1,746 hotel rooms, said Visit Buffalo Niagara.

The six new projects include 576 rooms -- a 33 percent increase in downtown's inventory -- though the 200 rooms included for the Webster block project are an estimate.

Does downtown Buffalo need all of these hotel rooms?

"I believe part of it is survival of the fittest. You will see some natural attrition -- there's no question about it," said Mark D. Croce, owner of Statler City and a slew of downtown taverns and restaurants. "The market isn't going to support all the different proposed hotels."

But the developers say banks wouldn't lend money for these projects if they weren't convinced of the demand. And the involvement of the nation's biggest hotel chains is a positive sign, said Brendan R. Mehaffy, executive director of the city's Office of Strategic Planning.

"It's not the local investors, it's the national brands, the national flags, that are saying there's demand," he said.

HVS, a hospitality consulting and research firm, determined through a market study for the Hamister Group that downtown Buffalo needs another 540 hotel rooms. "There is enormous demand for these hotels," Hamister said.


(c)2012 The Buffalo News (Buffalo, N.Y.)

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