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White Lodging and REI Real Estate Services Planning to Develop
a 300-room Hotel in Austin, Texas

Plan Follows Closely After White Lodging Began the 1,012-room
JW Marriott Convention Hotel Project in Austin

By Shonda Novak, Austin American-StatesmanMcClatchy-Tribune Regional News

Sept. 12, 2012--Less than a month after officially breaking ground on a 1,012-room convention hotel in downtown Austin, White Lodging Services Corp. is planning another 300-room upscale hotel just a few blocks away.

Indiana-based White Lodging is seeking a zoning change from the City of Austin to build a larger hotel on the site than current zoning would allow. It would be built on vacant land at the northeast corner of East Fifth Street and San Jacinto Boulevard. Austin lawyer Harry Whittington said he and other family members have owned the land -- one-fourth of a block -- for about 45 years.

The hotel brand is expected to be announced soon, White Lodging officials said.

"White Lodging has great confidence in the Austin market and believes there is an opportunity to develop an additional first-class, full-service hotel here," said Deno Yiankes, president and CEO of White Lodging's investments and development division. "We look forward to communicating more details about this exciting project in the next 30 days."

White Lodging's partner in the project is REI Real Estate Services LLC of Indianapolis.

There's no word yet on when the project is expected to break ground or the height of the proposed tower. White Lodging also has not disclosed the estimated cost of the project or any details about financing. If approved, the zoning change would allow a project of about 230,000 square feet, larger than the 144,000 square feet current zoning allows.

"We go before the (City of Austin's ) Planning Commission later this month and look forward to voluntary appearances at the Design Commission and Downtown Commission to share and get input," said Richard Suttle Jr., White Lodging's Austin attorney.

The Whittingtons will be joint owners in the project, and are contributing the land, Harry Whittington said.

"We're very pleased with the group we've contracted with," Whittington said. "We feel they're very capable, and good, responsible builders. They've had a lot of experience in developing hotels in the country."

Last month, White Lodging broke ground on a $300 million JW Marriott convention hotel at Second Street and Congress Avenue. The 33-story hotel is expected to open in early 2015.

Another developer, Manchester Texas Financial Group, plans to break ground in the spring on a $350 million Fairmont hotel with 1,000 rooms at East Cesar Chavez and Red River streets. The 50-story Fairmont also would open in 2015.

White Lodging has another hotel under construction downtown, a 296-room Hyatt Place rising at San Jacinto and East Third. Those three hotels, along with White Lodging's proposed 300-room hotel and a 137-room Hampton Inn & Suites under construction on Lavaca Street, would bring downtown's hotel room count to 8,700-plus.

Bob Lander, president and CEO of the Austin Convention and Visitors Bureau, said Austin continues to see "incredible faith in the growth of this market" from White Lodging.

"We're not surprised and we're very happy we're looking at another full-service hotel in close proximity to the convention center," Lander said. He said downtown Austin has the highest hotel occupancy, and highest average daily room rate, of any major city in Texas.

"It's a two-year buildout on the convention hotels, so as demand continues to grow a little bit each year, we'll have better luck in absorbing the new inventory," Lander said.

Downtown hotel rooms were about 75 percent occupied last year, and were 78 percent occupied through June, said Randy McCaslin, vice president for the Texas and Louisiana markets of PKF Consulting USA, a hospitality industry consulting firm.

"Typically, new hotels are added to a market when the market reaches the upper 60s, so the market can certainly absorb more rooms," McCaslin said. "Additionally, the new convention center hotels will bring new demand to Austin that is currently not in the market. The CVB has had to turn away groups that wanted to come to Austin because of the lack of enough hotel rooms. So, while the large hotels will add a lot of new rooms ... they will also create a lot of new demand."

Contact Shonda Novak at 445-3856


(c)2012 Austin American-Statesman, Texas

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