April 03, 2012--Managers of new hotels launched in the business district near Arsenal Street and Interstate 81 in Watertown say the market is getting saturated, as more than 500 rooms have been added to the area since 2006.

An economic surge spurred by growth at Fort Drum has enticed a handful of new hotels to set up shop in the Arsenal Street area over the past three years: Holiday Inn Express & Suites, 1290 Arsenal St.; Hampton Inn, 155 Commerce Park Drive; Hilton Garden Inn, also at 1290 Arsenal St., and Fairfield Inn, 250 Commerce Park Drive, which is slated to open by June.

But managers say that economic growth is starting to wind down and that the number of hotels in the area has reached a saturation point, leaving the market in a vulnerable position.

Although managers say they have healthy occupancy rates now, the situation could take a turn for the worse in a hurry as Fort Drum-related business projects continue to fade away, said Jody L. Petit, general manager at the Hilton Garden Inn, which opened in September. Offering a restaurant, banquet room and three meals a day, the upscale hotel is the only new high-end, full-service hotel in the Arsenal Street district; the Best Western Carriage House Inn, 300 Washington St., and Ramada Inn, 6300 Arsenal St., are the only other full-scale hotels in Watertown.

Collectively, "we've more than doubled the amount of rooms in Watertown over the past six years," Mrs. Petit said. "At the start, there were only the Best Western, Ramada Inn and Comfort Inn, which totaled 440 rooms. You can double the amount of rooms, but you can't double the amount of customers."

Demand for hotels was booming in Watertown five years ago, Mrs. Petit said, but that trend is reversing.

Describing today's hotel market as "soft," she said the number of business clients traveling to the area hasn't grown much. And when housing projects to meet demand at Fort Drum wind down in the coming years, these hotels will compete for an even smaller market of business travelers without the abundance of construction workers.

"The demand is almost the same as it was, but it's like the market now has more pieces of the same pie with the new hotels," Mrs. Petit said.

Because there's a large number of hotel rooms already in the area, Mrs. Petit predicted the 103-room Fairfield Inn now under construction near the Comfort Inn, 110 Commerce Park Drive, likely will have a challenging time filling its rooms.

The midscale hotel will have the same niche as the Holiday Inn Express and Hampton Inn, offering similar rates geared toward corporate business travelers, along with an indoor pool and complimentary breakfast.

"We've already reached a saturation point with the number of hotels in the area, and I think (the Fairfield Inn) is definitely going to have a hard time -- it's crazy what they're doing. I think they're going to pull at least one-third of the business away from the Hampton Inn and Holiday Inn Express, which have the same midscale corporate markets," Mrs. Petit said, adding that move likely also will steal a slice of customers from the Hilton Garden Inn.

But increased competition among hotels hasn't been exclusively negative. As as result of new hotels charging higher rates for rooms, a handful of hotels here have completed renovation projects and notched up their prices owing to the competitive market. General Manager Charlotte H. Waterson said the Holiday Inn Express -- a midscale, 115-room hotel launched in 2007 that sits next to the Hilton Garden Inn -- has maintained stable occupancy rates despite the surplus of hotel rooms in the area.

"Travelers now have a lot more options here, with everything from low-budget to high-end hotels," Ms. Waterson said. "Business here is doing well despite new hotels coming on line; the new development has encouraged hotels to improve their image and make upgrades, so it's been good for the area."

In contrast with Mrs. Petit, Ms. Waterson said the Fairfield Inn should be beneficial for the local economy, although she agreed that the reduced growth at Fort Drum will increase competition.

"I think the hotels in the area are going to reach a saturation point when (Fairfield) opens," she said.

Managers at the Hampton Inn and Comfort Inn, near each other on Commerce Park Drive, say business is healthy in spite of the competitive market. Both hotels are owned by Peppercorn Lodging Co. of Liverpool.

"Competition is always good -- it keeps us on our toes," said Hampton Inn General Manager Deborah G. Neher. She said about 50 percent of clients there participate in a rewards program, which makes them loyal clients the hotel can rely on.

"I don't think we've reached a saturation point yet, so I think another hotel in the area will be great," she said.

The Comfort Inn benefited from the increased competition by renovating its 135 rooms in 2009, said General Manager Trina A. Hogan. But she said another hotel added to the mix will make luring new clients more challenging.

"We had a slow winter here, and I think it's partly due to all of the places to go in this area," Ms. Hogan said. "It's hard to tell how the Fairfield Inn is going to affect us -- we're going to have to wait and see."

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