|By Laura Oleniacz, The Herald-Sun,
Durham, N.C.McClatchy-Tribune Regional News
July 17, 2012--DURHAM -- The president of the company that's looking to develop the downtown SunTrust tower into a hotel with a public contemporary art museum expects strong demand in downtown Durham for hotel rooms.
The company, 21c Museum Hotels, opened its first hotel in Louisville, Ky., in 2006. The company also is working on hotels in Cincinnati, Ohio, in Bentonville, Ark., and in Lexington, Ky. All of the company's hotels will feature public contemporary art space, said Craig Greenberg, company president.
The proposed redevelopment of the tower in Durham into a 125-room hotel is expected to cost more than $48 million. Greenberg said the company is targeting to see the hotel open in 2014.
The project is expected to be one of 21c's more expensive projects, behind the hotel in Cincinnati that has a price tag of about $51 million, Greenberg said. The company expects "strong demand" in Durham for a hotel, he said.
"We think there will be a lot of new visitors for conventions, for business meetings, or for leisure that want to come to Durham as a result of our hotel being there," Greenberg said.
In 2011, the average rate for 21c Museum Hotels' Louisville hotel was $215 per room, Greenberg said. The hotel saw just more than 75 percent occupancy for the year.
"And that rate is competitive with the market, but at the top of the market, and we expect similarly in Durham, to be competitive with the market, but at the top of the market," Greenberg said.
According to PKF Hospitality Research LLC's July-August 2012 edition of the report "Hotel Horizons Forecast," the average daily rate for upper-priced hotels in the Raleigh-Durham market for 2011 was $110.33. For all hotels in the market in the period, the average daily rate was reported at $82.21.
Shelly Green, president of the Durham Convention and Visitors Bureau, said the city has only one hotel that fits into the luxury market category -- the Washington Duke Inn and Golf Club.
"There has been demand in that price range that we haven't necessarily had all of the rooms ... to fill that," she said.
Green also said there have been gains in the number of hotel rooms sold in Durham and in the average daily rate for hotel rooms since 2010.
"By the time this property actually gets built, they're going to be coming in at a great time," she said.
Bill Kalkhof, president of Downtown Durham Inc., said the investigation of the investment indicated a market for the hotel downtown. The reason is, he said, that it would serve clients of companies located in American Tobacco, as well as Duke University and the Duke University Health System.
"Given the hotel occupancy numbers at Washington Duke, there appears to be more business on the high end of the hotel business," he added.
Kalkhof also said he believes there is a need for at least 700 more hotel rooms of any price level in downtown in order to make the Durham Convention Center successful.
"(The company is proposing) to bring 125 rooms, so that's a nice start on those hotel rooms within walking distance," Kalkhof said.
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