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Hot Hotel Debate: Sides Argue Impact of Planned Downtown Savannah
Hotels on Proposed Convention Center Hotel

By Adam Van Brimmer, Savannah Morning News, Ga.McClatchy-Tribune Regional News

April 08, 2012--Downtown Savannah's hotel boom is about to resume and could doom prospects for a convention center headquarters hotel on Hutchinson Island.

Plans for three new hotels that will add approximately 375 rooms to the historic district have either been approved or are in the review stage with the Chatham County-Savannah Metropolitan Planning Commission.

The projects indicate private investment is available to build new hotels in Savannah's tourism district as the economy improves, local hotel operators say. The available financing further underscores their argument against county taxpayers underwriting $50 million for the proposed $131 million Hilton to be built next to the Savannah International Trade and Convention Center.

The hotel would include 500 rooms, 50,000 square feet of meeting space and a parking garage.

"More than anything these hotels coming in shows people can get financing for projects that make sense regardless of their size," said Whip Triplett with North Point Hospitality, which operates three hotels in the historic district and two more in midtown.

Convention Center hotel proponents argue the new projects have no bearing on the debate. None of the planned hotels address two of the main obstacles to Savannah attracting more and bigger conventions: A large block of rooms -- 300-plus -- in a single location reserved for convention bookings and extensive meeting and banquet space.

"The point is to reach that 650-room block on Hutchinson Island between two full-service hotels, the headquarters hotel and the Westin that already exists," Chatham County's assistant manager Pat Monahan said. "The private money isn't there for that."

The new hotels are a 150-room Embassy Suites on West Oglethorpe Avenue, a 165-room chain hotel at the corner of River Street and Martin Luther King Jr. Boulevard and a 55-room boutique hotel on Bay Street.

Saturation point

The new hotels may be limited in size and scope, but opponents seize on the fact that the three projects will push the number of historic district hotel rooms past the 5,000 mark.

They also point to a number of other potential hotel sites available downtown, including Savannah River Landing and the two Georgia Power properties on opposite ends of River Street.

A headquarters hotel would potentially flood the market and result in an uptick in vacancy rates and drop in room rates, opponents say. The risk is why private lenders are unwilling to fully underwrite the convention center hotel, they maintain.

"Blanketing a market with hundreds of rooms at one time could drown the market," said Riki Patel, whose family is building the Bay Street boutique hotel to be known as The Ryan Hotel. "Their pricing strategy will be to slash rates to fill the hotel. My job is to put heads in beds, and that's going to be their job, too."

The historic district's saturation point is often debated. Seventeen hotels have opened downtown this century, 11 of those between 2004 and 2009. Yet the overall occupancy rate has remained in the 70 to 75 percent range despite the increase in supply, according to Visit Savannah Executive Director Joe Marinelli.

"We've grown the demand and been able to absorb the inventory without seeing a decline in rates," Marinelli said. "We had our best year ever for tourism in 2010, eclipsed that in 2011 and are off to a strong start in 2012. I'm sure there's a point where you have too many hotels and too many rooms, but I don't know who can predict those for Savannah at this point."

Marinelli is charged with attracting conventions to Savannah and acknowledges meeting planners often lament the city's shortage of "committable blocks of rooms." The three planned hotels will be welcome additions to the market but are unlikely to help Visit Savannah generate new convention and meeting business, Marinelli said.

Supply issues

A large, full-service headquarters hotel with a 300-to-400 room committable block would help Savannah market to conventions of 2,500 attendees and larger, meeting planners say.

The hotel would reserve 400 of its 500 rooms for Visit Savannah and the trade center authority to sell up to 18 months in advance of an event. Add those to the 250 the Westin can provide and another 250 available from a mix of hotels in the historic district, most of those in the Marriott Riverfront, the Hyatt Regency and the Hilton DeSoto, and Savannah would have 900 committable rooms.

"That's the ideal; that's what these large groups want," Monahan, the assistant county manager, said.

The hoteliers argue Savannah has a large supply of available rooms already, if not in the preferred committable blocks. Most conventions are held on weekdays, when the historic district's occupancy rate is closer to 50 percent, they say.

The occupancy rate rises to nearly 100 percent on Thursday, Friday and Saturday nights, which accounts for the 70 to 75 percent average.

"There's definitely space downtown to do what needs to be done, particularly during the week," Patel said. "And people want to stay on the downtown side of the river, where everything is. I don't know who wins with a big hotel being built on Hutchinson, but it's not visitors, local businesses or even the hotel itself."


(c)2012 the Savannah Morning News (Savannah, Ga.)

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