Apr. 18--N.C. State University leaders have relied on a series of marketing studies to justify their confidence in a planned $65 million hotel and conference center. 

Critics in the private hotel industry, who will take their case to university trustees today, cite the same studies when they predict that the project will be a big money-loser for NCSU. The studies conducted for NCSU by PKF Consulting suggest that on any given day, nearly 40 percent of the hotel's 250 rooms will be filled with people attending conferences and other events sponsored by NCSU. 

PKF's estimate of market demand for the four-star conference hotel was last updated in 2001. It used data recycled from earlier surveys, and its projections are based on a room rate far less than what NCSU actually will charge when it opens the hotel in 2004. 

The studies play a critical role in NCSU's belief that the project will not lose money and drain resources from other university needs. Benchmark Hospitality, the company that would manage the Centennial Campus Executive Conference Center and Hotel, used the PKF studies to forecast $5.3 million in net income in its first year and $12.8 million in five years. 

NCSU officials say the studies provide an accurate picture of a strong market demand for the conference center. "In every instance, the market studies suggested a 'first class' facility of 250 guest rooms and approximately 30,000 square feet of conference space," NCSU Chancellor Marye Anne Fox said in a letter last week to two hotel groups that oppose the center. 

But opponents say the studies are far too optimistic in their predictions of rooms that will be filled at rates much higher than what private conference hotels charge now. "It is a substantial leap," said Jim Hobbs, president of the N.C. Hotel and Motel Association. 

Lawyers for his group and the N.C. Travel and Tourism Coalition will address the NCSU trustees today. 

PKF is a well-known consultant in the hospitality business, with offices in eight major U.S. cities and in Singapore. David E. Arnold, the executive vice president for PKF's Philadelphia office, was in charge of the NCSU market studies. 

Arnold could not be reached for comment. His office manager said he does not return reporters' calls. 

NCSU hired PKF in 1995 to assess the market for a hotel conference center that would include a championship-caliber golf course. PKF produced studies in 1996, 1999 and 2001 expressing confidence that the center would be a success. 

The two most recent studies base their projections on a daily conference center rate of $200 including room, meals and meeting space. 

NCSU says the average daily rate for the conference center will be $288. Attendees at university events will pay about $249, and non-university customers will be charged about $320. PKF estimated that 41 percent of the people who attend NCSU-sponsored events each year are paying "comparable" rates now. Its numbers showed that 10 percent of NCSU attendees pay as much as $200 per night, and an additional 31 percent pay $150 to $199 per night. 

The 10 percent paying above $200 amount to about 5,200 room-nights per year. But NCSU's prediction that the hotel will sell 55,312 room-nights in its first year includes a much higher expectation of 35,000 for people attending NCSU-sponsored events. 

Benchmark and another private company, Hines, originally planned to own the hotel. After they expressed doubts about its profitability and asked NCSU to guarantee at least 35,000 room-nights, NCSU decided to take ownership of the project. It is now seeking $80 million in financing to build it. 

Bob Geolas, NCSU's Centennial Campus coordinator, predicted that inflation will drive market rates closer to the Centennial Campus rate by the time it opens in two years. Hobbs said he doubted hotel costs would climb that fast. 

The data for room usage in the 2001 and 1999 studies come from a 1999 survey of NCSU's 525 departments that drew responses from only 115. 

An NCSU memo written Sept. 27, 1999, days before the PKF study was published, suggests that PKF got an even smaller response than its study reports. Jaine Place, a former Centennial Campus development specialist, noted in the memo that "this year's sample was quite different looking, largely because we are missing many of the returns from people who reported large demand numbers in 1996." She suggested that PKF substitute 1996 survey data for 21 department heads who had not replied in 1999. 

"The only alternative to doing this would be to call each of them and try to drag the information out of them -- a time-consuming task that our office cannot undertake with our current workload," Place wrote. 

Geolas said PKF did not follow Place's suggestion and attempted to interview those department heads by phone. He said the university no longer has the survey results. Four department heads contacted by The News & Observer could not recall being interviewed by PKF in 1999. 

PKF opted not to conduct a new survey for its 2001 report, choosing to rely on the 1999 findings. The firm also interviewed the deans of three of the university's largest colleges and the director of the master's degree program at the College of Management, who indicated that there was greater demand for the center. 

Hobbs said NCSU should conduct a new survey, given the downturn in the market that began a year ago. He said PKF's latest study was conducted when the market was at its peak. PKF's Arnold, in a letter April 1 to Geolas, said he did not believe an additional study was necessary. 

"Since the NCSU project will not be open until 2004, we believe that the projections which were made last year will remain essentially valid," Arnold wrote. 

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(c) 2002, The News & Observer, Raleigh, N.C. Distributed by Knight Ridder/Tribune Business News.