Kurt’s quote (see below for details and context):
With improvement in industry fundamentals in recent years and little new supply since the recession, banks are willing to finance hotel development and Charlotte is drawing increased attention from hotel developers and investors, says Kurt Schoenhoff, vice president of hospitality and brokerage services at Selwyn Property Group. Uptown, SouthPark, Ballantyne and the airport area are the most active submarkets, he says.
Full Article:
Brian Leary, an executive at Crescent Communities, learned about the health of the local hotel market firsthand when making travel arrangements for a couple of colleagues last year. The cheapest room available in uptown, he recalled at a Charlotte Business Journal event, was at The Westin Charlotte. The rate: More than $300 per night.
“So things are good in the business,” he said with a chuckle. “We’re under-hoteled.”
Crescent is responding to that need by including a 300- to 400-room full-service hotel at its proposed Tryon Place mixed-use development.
Leary says the firm has been inundated with inquiries from hotel developers that want to work with the Charlotte firm on the project. It’s one of several hotels planned in uptown after a prolonged break from construction during the recession.
In fiscal 2014, which ended in June, Mecklenburg County hotels sold just over 6 million room nights, the largest number on record, according to the Charlotte Regional Visitors Authority. Through October, Charlotte hotel occupancy stood at 70.5%, well above the 66.1% national figure, and the average daily rate was $93.71, well below $115.85 nationally, according to Smith Travel Research.
With improvement in industry fundamentals in recent years and little new supply since the recession, banks are willing to finance hotel development and Charlotte is drawing increased attention from hotel developers and investors, says Kurt Schoenhoff, vice president of hospitality and brokerage services at Selwyn Property Group. Uptown, SouthPark, Ballantyne and the airport area are the most active submarkets, he says.
“It’s very active,” Schoenhoff says. “I expect hotel development to remain strong through 2015 at least and maybe into 2016.”
Schoenhoff says uptown Charlotte, where hotel activity has been busiest, is in the eighth inning of the development cycle, assuming all of the planned hotels for the submarket are built in the next couple of years.
Mohammad Jenatian, president of the Greater Charlotte Hospitality & Tourism Alliance, says developers are attracted to the market because they can buy property at a good value while occupancy rates and average daily rates still have room to improve. While Charlotte hotel demand has traditionally come from corporate business, he says, convention business has improved dramatically. Sports, concerts and other events have helped turn traditionally slow months into winners for the industry. February, he says, used to be one of the worst months for hotel operators in Charlotte, but because of the CIAA basketball tournament, it’s now one of the best.
“These are good times for the industry,” he says. “We are just scratching the surface.”
But the development window won’t stay open forever, says Birju Patel, president of Greensboro-based BPR Properties. BPR and CMC Hotels in Raleigh started construction last year for a 10-story, 250-room Embassy Suites hotel near the Charlotte Convention Center. Patel says he’s not overly concerned about the number of hotel projects proposed uptown because he doesn’t believe all of them will get built during the current development cycle.
“I’d be surprised to see more than 50% of those projects go up, during this cycle at least,” he says.
With interest rates likely to increase over the next couple of years, development activity seems poised to slow in 2016 and decline further in 2017 as new hotel properties open, he says.
“Money is so cheap to borrow right now,” Patel adds. “That’s why you see so much development. I believe that whatever hotels haven’t opened over the next couple years in Charlotte probably aren’t going to happen. It’s going to be extremely hard for them to get financing that makes sense.”
Will Boye
Senior Staff Writer
Charlotte Business Journal
