WFSB-TV’s former studio location on Constitution Plaza — a vacant eyesore at a critical gateway to downtown Hartford after the building was demolished a decade ago — is among at least three potential sites for new downtown hotels.
Developers have approached the Capital Region Development Authority about the potential for hotel financing in recent weeks. The discussions come just as a consultant has recommended the addition of at least one 300-500-room hotel in the downtown area in the next five years to help boost business at the Connecticut Convention Center.
Michael W. Freimuth, CRDA’s executive director, also confirmed that the authority has been approached about the possibility of a “micro hotel” on Lewis Street and around the corner from Bushnell Park. The building is owned by LAZ Parking and the parking giant has its headquarters there. LAZ is moving its corporate offices to nearby One Financial Plaza, the “Gold Building,” which it bought with a partner earlier this year.
In addition, Freimuth said there is interest in a third location for a possible hotel in the heart of downtown, but he declined to name the property.
Freimuth declined to name the developers because the discussions are in the earliest stages.
Neither LAZ nor Abul Islam, the owner of the Constitution Plaza site, could immediately be reached for comment Friday.
The city’s hotel industry could be in for a shake-up in the coming years.
There are active discussions with potential buyers of the Red Lion Hotel on Morgan Street, near Dunkin’ Donuts Park, that involve converting the entire hotel into apartments.
A lender who foreclosed on the project is now completing the conversion of the top nine floors into rentals, creating 96 units. The hotel had 388 guest rooms.
If the entire building, which has suffered in the past from low occupancy because of its location, becomes all apartments, it would remove the remaining 188 guest rooms.
Public financing — in this case through CRDA — could become a significant obstacle. In contrast to the free-wheeling borrowing during the tenure of former Gov. Dannel P. Malloy for economic development in Hartford, Gov. Ned Lamont has clamped down on bonding, coining the phrase “debt diet.”
Lamont has convened just three meetings of the State Bond Commission so far this year and, in the one Tuesday, CRDA projects sat on the sidelines.
Adding more hotel rooms has always been a concern downtown. While hotels see often see strong business travel during the week, bookings weaken on the weekend and are subject to seasonal swings.
Strong business travel, while good for hotel owners, pushes rates higher, making them less palatable to conventioneers. Cheaper rates exist in the surrounding suburbs, but convention-goers don’t necessarily want to drive to their events.
“We need product to secure events,” Freimuth said, in an interview. “But will you get enough traffic to support the hotel? That’s the question.”
According to STR, which tracks hotel trends, the city of Hartford had an overall occupancy of 61 percent in 2018, compared with 57.2 percent in 2013. The improvement nudged up the average daily rate — a key indicator of hotel profitability — from $130.56 in 2013 to $142.22, STR said.
A smaller slice of the city by STR focusing solely on the 06103 zip code, which encompasses the majority of the downtown hotels, showed a stable market that was commanding higher room rental rates. Occupancy in 2013 was nearly 66 percent, about the same as 2018; but the average daily rate crept higher to $166.22 in 2018, from $155.16 in 2013.
While encouraging, the occupancy levels are still below the 70 percent or better that would mark the entrance into a healthy market, experts say.
Johnson Consulting of Chicago was hired by CRDA earlier this year to conduct a study of changes that could be made as the Connecticut Convention Center turns 15.
One that figures prominently is adding more hotel rooms within a two- to three-block walk. Johnson Consulting sees the need for adding 1,500 guest rooms in the next decade to further expand convention center business.
At Thursday night’s CRDA board of directors meeting, Hartford Mayor Luke Bronin, a board member, said the city has had discussions with potential developers of “micro hotels” in the city. After the meeting, Bronin declined to name sites or developers.
Micro hotels often have small rooms — in some cases as little as 50 square feet — but large common areas for working, dining and drinking. The trend began abroad and later established a presence in New York.
The hotels are primarily in urban areas and appeal to younger travelers with such options as automated check-in. There are funky takes on the traditional hotel visit. For instance, a reception desk can double as a bar.
In a presentation to the CRDA board, Charles Johnson, president and chief executive of Johnson Consulting, said it does not matter how the downtown adds hotel rooms, or in what increments.
The firm estimates that a 400-room hotel could cost $120 million.
“No matter how you get it, go for it,” Johnson said.
Kenneth R. Gosselin can be reached at [email protected].
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