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With Other New Projects in the Works, Tourism Officials Back Off on
Long-Time Push for 1,000-room Hotel in Charlotte, North Carolina

By Kerry Singe and Steve Harrison, The Charlotte ObserverMcClatchy-Tribune Regional News

Feb. 16, 2013--Charlotte tourism officials have for years said a 1,000-room hotel could bolster the city's convention business.

As the city prepared to host the Democratic National Convention last year, the head of the Charlotte Regional Visitors Authority said a 1,000-room hotel could help the city land up to seven large conventions a year, which would bring thousands of visitors uptown. CRVA chief executive Tom Murray said a hotel of that size would have to be subsidized by taxpayers, as the 700-room Westin was a decade ago.

But Murray now says this isn't the time for a mammoth 1,000-room hotel, or a subsidy, and that the uptown hotel market should instead focus on midsized projects, with hundreds of rooms instead.

"Bringing in a 1,000-room hotel could have a disruptive effect on our existing hotel inventory," Murray told the Observer last week. "That's probably not the strategy that we would be working moving forward."

Two projects recently announced could herald the type of development that Murray says uptown needs to meet future demand.

Earlier this month, Crescent Resources said it plans to build a mixed-used project anchored by offices on three acres at the corner of South Tryon and East Stonewall streets. Crescent is still designing the project, but company officials said they are considering apartments, retail and a hotel.

In a separate project, a Greensboro-based hotel developer bought land near the convention center, where it plans to build a 230-room Embassy Suites.

Murray's comments mark a subtle shift at the CRVA, which has long touted the benefits of 1,000-room hotels. Cities across the nation -- such as Dallas, Indianapolis and St. Louis -- have helped finance 1,000-room hotels because convention planners have told them they want to have all their delegates under one roof.

Michael Smith of Charlotte Center City Partners has advocated for a 1,000-room hotel, but said last week he agrees with Murray that growth could instead come "organically," with smaller hotels or additions to existing ones.

Murray's position puts him in line with the local hotel industry, which opposes public funding of any new hotel. Sid Smith of the Charlotte Area Hotel Association said demand is there to accommodate more rooms. He said additional hotels could help the industry by attracting more conventions.

"The need is there. Business has been pretty good in Charlotte," Sid Smith said. "We feel making such a project happen with tax dollars would be unfair to current hotel owners. Let another investor come in and take the risk along with us and compete on equal footing."

If the city ever did subsidize a 1,000-room hotel, the money likely would come through two taxes that fund the city's convention center: a 1 percent tax on prepared food and beverages, and a tax on hotel and motel rooms. The fund comprised of those taxes currently has enough money to finance up to $110 million in debt, the city has said. Charlotte Deputy City Manager Ron Kimble said that money should be reserved for an expansion or renovation of the existing convention center, which opened in 1996.

Occupancy, room rates up

The CRVA has said the city's hotel industry is at "historic levels" of occupancy and profitability and has bounced back from the recession that began in 2008.

The Mecklenburg County occupancy rate for hotels and motels was 66.3 percent in 2012, up from 66.1 percent in 2007. Room rates have also increased.

Commercial real estate brokers say developers continue to scout potential sites.

Joe Hallow, president and chief operating officer of Bissell Hotels, said the Charlotte market could accommodate more rooms. But, he said, finding financing for a mega-hotel would be challenging. Hallow, a former CRVA board member, also said tourism leaders should consider why they want more hotel rooms.

More rooms should be built only to meet expected demand, not to try to create new demand, he said.

In the wake of the DNC, some civic boosters have floated the idea of hosting pro football's biggest game. Last year, NFL Commissioner Roger Goodell told a group of Charlotte business and political leaders that the city could host a Super Bowl if Bank of America Stadium were renovated and the city added more "high-quality" hotel rooms.

Murray said talk of a Super Bowl is "ambitious" and the city is 10 to 20 years from landing the big game.

Singe: 704-358-5085


(c)2013 The Charlotte Observer (Charlotte, N.C.)

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