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After Years of No New Construction, North Carolina's Triangle Region
Sees Several Hotels Projects Breaking Ground

By David Bracken, The News & Observer, Raleigh, N.C.McClatchy-Tribune Regional News

Feb. 23, 2012--Folks who continue to lament the lack of development around the RBC Center in West Raleigh got some good news this month with the opening of a new hotel in its shadow.

The 132-room Hyatt Place Raleigh West, which held its grand opening Wednesday night, is also a sign that the local hospitality industry is recovering after a brutal downturn.

After several years of virtually no new construction, a number of Triangle hotel projects are breaking ground as developers anticipate opening in a much improved market.

Winwood Hospitality is constructing a 135-room Hampton Inn & Suites at the intersection of Interstate 440 and Glenwood Avenue in Raleigh.

Glenwood Hospitality Associates is building a 126-room Hampton Inn & Suites at the corner of Glenwood Avenue and Johnson Street in the Glenwood South entertainment district in Raleigh.

Kane Realty and Concord Hospitality Enterprises have begun site work on a new $40 million Hyatt hotel on the east side of Six Forks Road in Raleigh's North Hills.

Concord also is turning the landmark McPherson Hospital in Durham into a 146-room extended-stay Residence Inn by Marriott.

The U.S. hotel industry hit its nadir in 2009, as the recession caused both businesses and families to severely curtail their travel.

Like many other industries that suffered similar drops in demand, hotels responded by offering significant discounts and concessions to get people into rooms.

The question now is whether the economy has improved enough to where hotel operators can hold the line on such discounts.

Many are already doing so, said Pradeep Sharma, who owns a 99-room Wingate Inn & Suites near the RBC Center.

"We've also slowed down big time our policy of discounting," he said. "We're believing in rate integrity. We'd rather have fewer customers and just take care of them nicely than do deep discounting."

Sharma is actually excited about the opening of the new Hyatt Place nearby, as he believes it will help make the area more of a destination for travelers. He also believes that because it's a Hyatt, a higher-end brand, it will help elevate room rates for the area.

Sharma's Wingate Inn gets a mix of business travelers and visitors attending events at the RBC Center.

"Business customers is where there's an uptick," he said.

Rooms, rates and taxes

The hotel occupancy rate in the Triangle last year was 60.7 percent, up 4.6 percent compared with 2010, according to Smith Travel Research, a Tennessee company that tracks the lodging industry.

Revenue per available room, a key industry statistic, has also been increasing in the Triangle, though it remains about 10 percent below where it was four years ago.

Although travelers don't like paying more to stay in hotels, the industry's improving health doesn't only benefit hotel owners.

More nights spent in hotels means guests spending money on food, drinks and other items.

For local governments such as Wake County and Raleigh, that means more revenue from the countywide hotel/motel and prepared food taxes. In Wake County, those taxes were up 12.6 percent through the first 11 months of last year.

Of course, the ability of the hotels to enforce discipline when it comes to rate discounts will ultimately depend on the economic recovery. While many businesses may now be in a position to pay higher rates, many households are keeping leisure travel to a minimum as they pay down debt or deal with stagnant or declining wages.

For those folks, simply providing exemplary service may not be enough.

Bracken: 919-829-4548


(c)2012 The News & Observer (Raleigh, N.C.)

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