New Hotel Rooms Will Get Absorbed Quickly

Several hotel projects in center city Charlotte are scheduled to deliver over the next few quarters, bringing more than 1,000 new rooms to a market that a local hospitality association says is “very good.”

Vince Chelena, executive director of the Charlotte Area Hotel Association, said that despite bad news circulating nationally over the fallout from North Carolina's House Bill 2 — a contentious bill passed last March that has led to canceled events, conventions and corporate relocations — the Charlotte hotel market is enjoying strong occupancy and rental rates. And, he said, several planned short- and long-term mixed-use projects containing hotels signal long-term positive prospects for the Queen City.

“We can absorb those additional rooms without affecting occupancy because of the growth of corporate business,” Chelena said. “There’s pressure on the hotels to satisfy the needs of large room blocks and conventions and (also) take care of corporate guests at the same time. The additional rooms downtown will be welcome because we can satisfy both.”

Data from the Charlotte Regional Visitors Authority, which tracks performance metrics for area hotels, indicated fiscal year 2016 (July 1, 2015 to June 30, 2016) ended with 73.1% occupancy (up 2.1% from fiscal year 2015); an average daily rate of $107.27 (up 5.3% from 2015); and $78.41 revenue per available room (up 7.6% from the year before).

Some other numbers to consider:

  • Several center city hotel projects under construction are scheduled to deliver soon, some in the next several weeks. According to Chelena, the 250-room Embassy Suites at the corner of Martin Luther King Jr. Boulevard and Caldwell Street is on track to open next month as well as the 42-room boutique hotel at the former Ivey's department store on Tryon Street. The 195-room SpringHill Suites near Spectrum Arena is set to open in March. In the fall, the 216-room Kimpton Hotel at 300 South Tryon will open. And by first quarter 2018, a dual-branded Marriott International (NYSE: MAR) project with an 184-room AC Hotel (Charlotte's first) and 116-room Residence Inn will open.
  • But hotels aren’t just popping up inside the Interstate 277 loop. Planned boutique projects outside of uptown, such as West Elm’s 150-room hotel at the Design Center of the Carolinas and Kimpton’s 128-room hotel in Dilworth, are providing new rooms in markets that traditionally haven’t had lodging options. In fact, as Chelena noted, there is a significant lack of hotels between uptown and SouthPark.
  • Likely a longer-term objective, city leaders and the CRVA have touted the huge implications that developing a convention center hotel would mean for center city. A convention center hotel, which could include 1,500 to 2,000 rooms, would help the CRVA solicit major conventions that require a significant number of hotel rooms in close proximity to the Charlotte Convention Center. While thousands of rooms are under construction or planned downtown, those projects are adding smaller quantities of rooms across several developments rather than in one mega hotel. The CRVA is amid planning an overhaul of the Charlotte Convention Center that could be worth $100 million.
  • In the Charlotte region, 8,367 new hotel rooms are under construction or in the planning phase, with 2,228 of those in center city, according to CAHA.
  • In 2017, 22 hotels are scheduled to open regionally.

For more about Charlotte’s hotel industry, check out the Charlotte Business Journal’s hospitality special report in Friday’s print edition.

Ashley Fahey
Staff Writer
Charlotte Business Journal

Ashley Fahey covers real estate and development for the Charlotte Business Journal.

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