July 30–When news broke two years ago that an Embassy Suites and a Hampton Inn & Suites were coming to Hillsboro, public and industry officials said the projects would add badly needed meeting space and hotel rooms to a city with high occupancy rates and uncompetitive pricing.

It turns out that those projects were just the beginning of a rush to build hotels in Oregon’s fifth-largest city.

The Embassy Suites and Hampton Inn & Suites alone brought 271 rooms to Hillsboro, sinking the city’s year-to-date occupancy rate from 79.2 percent through June 2013 to 70.4 percent through June of this year, according to data provided by the Washington County Visitors Association. And in the works are at least six new Hillsboro hotel projects that would bring nearly 1,000 more rooms.

If all the projects are approved and built, Hillsboro will have more than doubled the number of hotel rooms in the city, from 1,125 in July of 2013 to 2,394.

Hillsboro Planning Director Colin Cooper said the city is “simply catching up to the demand that had been there for some time.”

“It’s just a great indicator for the strength of the business climate in Hillsboro,” Cooper said. “And it is a way to allow the people that are visiting the businesses that are located in Hillsboro to stay here in the community.”

Cooper noted that the hotels will create jobs — both temporary construction workers and the longer-term employees at the future inns will make and spend money in Hillsboro, he said. More visitors also mean more hotel tax revenues for the city. Hillsboro collected nearly $787,000 in hotel taxes in 2014-15, city spokesman Patrick Preston said.

The new projects include a 146-room Marriott Residence Inn now under construction and scheduled to open next spring on Brookwood Parkway, near Shute Road. In April, the city approved a plan to build a Holiday Inn and a Candlewood Suites, together comprising 292 rooms, at Aloclek Drive and Cornell Road. A proposal for a 237-room Oxford Suites Hotel across the street was green-lighted in June.

As of last week, Hillsboro planners were also reviewing applications for a 140-room hotel to be built by Virginia developer Kalyan Hospitality and a 136-room inn slated for the AmberGlen neighborhood.

And McMenamins has proposed adding a 47-room hotel to the Cornelius Pass Roadhouse and converting the Imbrie House there to a bed and breakfast. (The city’s planning commission approved the alterations to the historic site, but McMenamins has not yet submitted a development review application.)

Todd Montgomery, an executive-in-residence in the hospitality management program at Oregon State University’s Cascades campus, said hotel construction “tends to ride behind the economy a little bit.” Since the end of 2012, the industry has undergone “massive expansion,” he said, with hotel companies “taking advantage of these low interest rates and cheap money.”

“The question is,” Montgomery said, “is there sustaining power or is there oversupply?”

Hillsboro, home to semiconductor manufacturers like Intel and Qorvo, could be in a better position than other cities because of the current boom in the tech industry, Montgomery said.

“I would think, given there’s so much tech there, that it’s more sustainable than potentially other industries,” Montgomery said, noting that many tech companies hire remote workers who occasionally visit headquarters and stay in nearby hotels. “But tech moves so fast that it’s really just hard to know.”

Nearly all of the incoming and proposed hotels — including the Marriott, which has potential for a 75-room addition and a future restaurant — are branded as “extended stay” inns with executive-style suites. Many of the plans call for amenities like indoor pools, conference space and fitness facilities. Such hotels are marketed toward business travelers, who before had sometimes stayed in Portland or Tigard despite visiting Hillsboro companies.

But not all of the hotels’ clients would be businesspeople, Cooper said.

“We’ve heard directly from hotels that they like our market because it’s not just a business, extended-stay market, but it’s also a weekend market,” Cooper said. The many athletic tournaments held at Hillsboro Stadium, Cooper pointed out, often attract families from across the state and beyond.

Jansen Construction, a company specializing in developing mid-size hotels, is building the Marriott just south of the Larkspur Landing, another extended-stay hotel geared toward corporate travelers. Jansen project manager Mark Wagner said, “There’s so much work out there, we’re turning away work.”

“Right now, Hillsboro is … pretty hot as far as people wanting to come in and build there,” Wagner said. He said that if the economy changes and interest rates rise, the market could cool down.

Cooper said more competition will drive prices down for hotel consumers. So far this year, the average daily rate in Hillsboro has actually been higher, at about $127, than it was before the two new hotels were built, according to the Washington County Visitors Association. Through June 2013, the rate was approximately $115. Hotels in Hillsboro remain more expensive than those in Beaverton, Tigard and Wilsonville, as they were in 2013.

Hotels built or proposed in Hillsboro since July 2013Hotel Rooms Status

Holiday Inn/Candlewood Suites 292 Approved

Oxford Suites Hotel 237 Approved

Kalyan Hospitality 140 Under review

AmberGlen Aloft Hotel 136 Under review

Marriott Residence Inn 146 Under construction

Embassy Suites 165 Open

Hampton Inn & Suites 106 Open

Cornelius Pass Roadhouse 47 Proposed

Hillsboro currently has 1,396 hotel rooms among 14 properties. There were 24.1 percent more rooms available in the city so far this year compared to similar numbers last year, the Washington County Visitors Association’s data shows. The market will ultimately decide how many hotels Hillsboro can support, Cooper said.

Montgomery, who has over 20 years of experience in the hospitality industry and spent time working at Hyatt, said hotel companies typically do feasibility studies before deciding to build.

They could be betting on Hillsboro’s future. City officials want to use urban renewal to turn the northern area of town, which is now primarily farmland, into an industrial center with perhaps as many as 15,000 new jobs.

But even if Hillsboro does lure the big companies necessary to fulfill that goal, will the businesses in turn attract enough travelers to fill up all the new hotels? Or will there be winners and losers?

“That is the million dollar question,” Montgomery said.

*Correction, 12:58 p.m.: This story has been updated to reflect the correct amount of hotel tax — nearly $787,000 — collected by the city in 2014-15. The city originally provided an incorrect figure of approximately $75,000.

*Update, 2:24 p.m.: This story has been updated to reflect additional data provided by the Washington County Visitors Association.

— Luke Hammill

[email protected]

503-294-4029

@HlsboroReporter