Developers rest plans on hotel demands

Vacation time is on its way back into  America’s household budgets, and travelers are searching for a place to stay. A lack of hotel construction during the recession means the sector is in high demand this year, putting area developers to work.

Two hotels are under construction in the Queen City, with tentative plans for at least two more.

“We are going through a catch-up period because the market suffered during the recession,” said David Hess, architect and partner with Butler, Rosenbury & Partners Inc.

“There were very few hotels built during that time, and now there are a lot of older properties in a market that needs continual refreshing.”

Hess said historically, BR&P records about 30 percent of its total yearly billing in the hospitality sector.

Six months into this year, the firm is running about 44 percent.

The growth spurt comes as hotel demand is at an all-time high in the area. According to the Springfield Convention and Visitors Bureau, 113,933 hotel rooms were occupied in Springfield this March, the largest figure since the CVB began collecting such data in 1990.

Room demand also was up 4.8 percent from last year, and the occupancy rate improved to 66.1 percent. Overall first-quarter demand rose 4.2 percent, bringing in $19.7 million.

Aiming to fill the need, the pipeline from global real estate consultant Lodging Econometrics continued its upward trend during the first quarter, with hotels under construction up 40 percent over last year. The pipeline stands at 3,226 total projects, up 13 percent, and 407,235 total rooms avaliable, up 15 percent.

Around town
EAS Investment Enterprises Inc.’s Hampton Inn off East Battlefield Road was originally slated for completion in April, but developer Earl Steinert said the estimated $7 million project should wrap up by Oct. 1.

“We got a slow start due to the weather with a wet spring and bad winter,” he said. “There was a two-month period where we couldn’t do anything.”

Despite the delays, Steinert said he already has another project in the works, aiming to bring a Home2 Suites by Hilton to the Springfield market. He declined to disclose details of the project, but said it would be built near the intersection of North Glenstone Avenue and Interstate 44, behind EAS Investment’s other Hampton Inn.

Steinert’s Home2  Suites  project could affect the plans of another area developer. In July 2013, O’Reilly Hospitality Management LLC announced plans to pursue a 114-unit Cambria Suites on the campus of Drury University.

“I still hope to complete that project, but it’s been a little sidetracked based on new hotel development in the area,” said CEO Tim O’Reilly.

O’Reilly said he also has heard a Denver-area developer aims to add a SpringHill Suites by Marriott on North Glenstone, close to O’Reilly Hospitality’s DoubleTree Hotel by Hilton, and the combination of the two projects has caused him to put the brakes on his Springfield plans.

“Those are substantial projects and I think we need to catch our breath first,” he said. “I want to get in the race at the right time. You can’t overbuild a city.”

O’Reilly currently is working on another Queen City project, the $10 million TownePlace Suites by Marriott being built kitty-corner to Mercy on South National.

Slated for completion last week, O’Reilly echoed Steinert’s weather constraints, noting the five-story, 71,000-square-foot project should wrap up in mid-August.

Around the nation
The New York state market tops the Lodging Econometrics list as having the most projects under construction with an unprecedented 180 projects and 30,304 rooms in the pipeline. When complete, the current number of hotels will increase by one-third.

BR&P’s Hess said his firm currently is working on three projects in the Empire State, including a Homewood Suites by Hilton, Home2 Suites and a Courtyard by Marriot.

“New York is keeping us busy. We also have projects in Michigan, Indiana and Texas,” he said, noting the firm isn’t currently working on any projects in Missouri.

Hess said brands carry a list of approved project vendors for franchisees, noting that’s how BR&P got the jobs in New York and Michigan.

Branson-based HCW LLC is developing a 10-story, 258-room, 202,913-square-foot DoubleTree Hotel with a 111,585-square-foot parking garage in Evansville, Ind., currently one of the largest projects BR&P is working on.

And the firm’s designs for the Denton, Texas, 11-story Embassy Suites Hotel and Conference Center are part of a public/private partnership developer O’Reilly is working on.

“This is 318 suites on University of North Texas land,” O’Reilly said of the partnership.

“It’s out to bid for a general contractor now and should start in September or October with a 20-month build.”

O’Reilly said the Dallas area is a prime hotel construction zone right now, with the fast-growth adjacent cities of Frisco and Plano advancing quicker than developers can keep up.

O’Reilly Hospitality inked a deal with Choice Hotels International Inc. last July, adding the Cambria Suites brand to the company’s growing portfolio, which includes five flags across six properties in three states.

The development company broke ground June 12, 2013, on a 129-room Plano hotel with an expected March opening, but the Cambria Suites is now expected to be complete by Aug. 31.

In October, O’Reilly signed on for another Cambria Suites, this one a 121-room project in Phoenix, Ariz.

“The Phoenix project hasn’t started construction because of delays in permitting and some revisions,” O’Reilly said, adding the company plans to rebid the project in July or August.

According to Lodging Econometrics, the Marriott brand has the most rooms in the pipeline with 613 projects and 75,982 rooms, followed by Hilton Worldwide and the InterContinental Hotels Group.

No matter the brand, the American Institute of Architects expects the hotel industry to be the strongest commercial building sector this year.

“There was a lot of planning during the recession and a lot of great sites, but nobody wanted to jump in the game,” O’Reilly said. “Right now is different than 2008. There are a lot more veterans in the game, not people who haven’t developed a hotel before.”

O’Reilly said high-growth areas in Miami and Houston, Texas, are among the development opportunities he’s considering outside of Springfield.

“Things are going at a frantic pace,” he said.[[In-content Ad]]