Raleigh hospitality group buys part of uptown block slated for hotel development

Another project could soon rise in uptown's First Ward following a recently closed land transaction.

Concord Levine Hotels LLC, affiliated with Raleigh-based hotel group Concord Hospitality Enterprises, recently purchased a 0.4-acre parcel at the corner of North College and East Eighth streets from LMC, the multifamily arm of Lennar Corp. (NYSE: LEN) that's developing a 549-unit apartment project on that same block. The portion of the site that Concord Hospitality acquired last week for $3 million was anticipated for hotel development, as previously reported by the Charlotte Business Journal.

Multiple attempts to reach Concord Hospitality for more details by deadline Thursday were unsuccessful.

Concord Hospitality has nine hotels in North Carolina listed as part of its portfolio, including the Homewood Suites by Hilton Charlotte Airport hotel on Yorkmont Road. Its other N.C. hotels are in Raleigh, Durham and Beaufort, though it's developed and owns hotels nationally, primarily on the East Coast.
LMC isn't breaking ground on its mixed-use project until later this year. It will include a 33-story high-rise with 365 units and a six-story, 184-unit midrise, as well as about 20,000 square feet of ground-floor retail fronting the Lynx Blue Line. LMC's project will occupy the rest of the block, which is bounded by East Eighth, North College and East Ninth streets and the light-rail line.

Concord's project will join a number of other hotel projects in the works or under construction in uptown. An Even Hotel and Home2 Suites by Hilton are underway now next to Novel Stonewall Station at Caldwell and Stonewall streets. Not far west, Crescent Communities recently appointed White Lodging as its hospitality partner at the Ally Charlotte Center block at Tryon and Stonewall streets, though a hotel flag has not yet been confirmed for that site. Vision Ventures and McKibbon Hospitality are nearing completion on the dual-branded AC Hotel and Residence Inn Charlotte City Center at the EpiCentre, which will add 300 rooms to uptown's hotel inventory. The Kessler Collection has begun construction on the 254-room Grand Bohemian Hotel at Trade and Church streets, and Valor Hospitality Partners and SB&G Group are developing a 270-room InterContinental Hotel at the Carolina Theatre site on North Tryon Street.

Expect more office space, housing and hotel rooms in center city's future

A lot more office, housing and hotel rooms are coming to Charlotte's center city, even in a long cycle that's been marked by overall strong performance across all real estate sectors.

That's according to the 2018 State of the Center City, an annual report by Charlotte Center City Partners that analyzes growth and development in Charlotte's urban core during the previous year as well as what's expected next. Data in the report examined uptown, South End and a portion of midtown.

Some of the key numbers from 2017: 1.4 million square feet of office space, 1,847 apartments and 713 hotel rooms opened in the center city.

Looking ahead, there's currently 5.1 million square feet of office space planned or under construction in center city in addition to 840,000 square feet of retail, 8,363 housing units and 2,276 hotel rooms.

Michael Smith, president and CEO of CCCP, said it's notable that there's growth across multiple real estate sectors — not strictly confined to just offices or apartments, for instance. He said that's likely because of pent-up demand and that the current development cycle has been marked by a cultural and demographic shift to the urban core, much more than in previous cycles in Charlotte.

Here's a look at a few key takeaways from the 2018 State of the Center City:


Although office development started fairly late in this cycle, Charlotte's center city is on track to deliver about as much new office space as the past few cycles.

"If we’re able to deliver 5 million to 7 million square feet (of office) per decade, it positions us to be able to respond," Smith said. "In the ‘80s, the ‘90s, the aughts, (development) was all bank-driven ... every three or four years, they would build a new tower, take half of it and then we’d have that inventory."

New office construction in this cycle is more developer- and institutional capital-driven. But buildings like 300 South Tryon and 615 South College that have been built by developers and investors have had strong demand and pre-leasing, Smith noted.

"I think that shows well for our market, which should help with asset values as some of these buildings are traded among institutional investors and, hopefully, this becomes our cycle where we prove our viability to institutional investors," he said. "Every cycle comes to an end; we just want them coming back for the next cycle."

The Blue Line that opened in 2007 has spurred billions in development along the rail line, with most of that new construction in South End being apartments. More recently, the neighborhood is seeing more density and mixture of uses being built — 500,000 square feet of office is planned or under construction.

"I think that the office market in South End is one that we’ve been anticipating for awhile, particularly from 277 down to the Camden/Tryon split," Smith said. "We believe that portion will develop much more like the CBD but it will have its unique South End and Gold District flair."

He cited Beacon Partners' RailYard project, under construction now, which includes 300,000 square feet of office space and 30,000 square feet of retail space. Smith said that project will be the new standard rather than the exception for office development in South End.


With nearly 2,000 new apartments opening in Charlotte's center city last year, 2017 was the busiest year to date for downtown's multifamily market.

Today, there are about 30,000 people living in center city, a growth of 600% since 1998. Much of that can be attributed to the urban apartment boom that's been a key theme nationally in this development cycle.

But because of high demand and quick absorption in the multifamily market here, rental rates are skyrocketing. The average monthly rent in center city is now $1,640, according to the report.

"If I were to identify anything that we need to be concerned about right now, it’s probably the affordability side of things," Smith said. "We don’t have a San Francisco, New York City, Washington kind of crisis, but we’re moving in the wrong direction and we’re going to push the lion’s share of our workforce into commute patterns that are unsustainable."

He said a report will soon be released detailing the findings of a task force, comprised of experts in affordable housing, that gives recommendations on new ways the private sector can build or preserve affordable units.

Smith noted that a lot of naturally occurring affordable housing in or near the CBD is being razed for new, oftentimes expensive, housing — or apartment owners embark on renovations at older properties that ultimately bump rents up 30% to 40%.

"We’ve got to find ways to preserve those long-term," he said.


Hotels continue to see demand in center city, with several projects having wrapped up in 2017 — the Kimpton Tryon Park Hotel, SpringHill Suites by Marriott Charlotte Uptown and Embassy Suites by Hilton Charlotte Uptown among them — but several more are underway or planned.

The occupancy rate in Charotte's center city is at 72%, according to the CCCP report, and more than 2,000 rooms are proposed or being built now. More than 800 rooms are anticipated to be added to the market in 2018.

"The average daily rates continue to climb yet when you look at what is paid in Nashville and in Austin, we’re still a relative value," Smith said.

There's been buzz recently about whether a convention center hotel, which contains between 800 and 1,000 rooms, is in Charlotte's near future. Such a hotel would cost hundreds of millions and likely require some type of public investment.

Smith said building a convention center hotel is a "best practice" for cities hoping to be a destination and necessary to compete with other major cities.

"When you look at the research, what’s proven out is that (a convention center hotel) raises all boats," he said. "It is actually in the best interest of other hotel operators because the entire market’s (revenue per available room) rises after that kind of a move."


Every development project along Stonewall Street — which encompasses nearly $3 billion in real estate activity — includes some amount of street-level retail, including uptown's first full-sized grocery store, Whole Foods Market, which is opening later this year near Stonewall and Caldwell streets.

In South End, Asana Partners has acquired several buildings in what's being called the Design District — in close proximity to and including the Design Center of the Carolinas — and Edens is redeveloping Atherton Mill. Both firms are investing significant capital into renovating and adding new retail space.

"The front part of this interest of retailers is being led by ... food and beverage and entertainment," Smith said, adding that soft-goods retail will come after retail has become more established. "As I’ve talked to developers and retail consultants in the past, retailers want to locate to places where their customers are already shopping."

Owners of older office buildings in uptown have also spent significant capital in refitting ground-floor lobbies into new restaurant and retail spaces, driving tenant activity and ultimately pushing per-square-foot rental rates.

Economic development

There are lots of corporate prospects "poking around in the market," Smith said, adding that while House Bill 2 — a controversial state law enacted from March 2016-17 and credited with stalled economic development efforts — was hard on inbound activity, it's important for Charlotte to be intentional about telling its story.

Charlotte was not a finalist city for Amazon's second headquarters, which promises 50,000 jobs and $5 billion in economic development over the next decade. Twenty cities made a short list for the project, including Raleigh. The Charlotte region not being on the list was "surprising and disappointing," Smith said, adding that he thought Charlotte would have been in the top 10.

"When you looked at what was on that list of the things that Amazon valued, I thought it lined up really well with the things that we’ve prioritized and invested in over the last few decades," he said.

He added that the process of pursuing Amazon HQ2 was a "worthwhile exercise" to figure out why Charlotte didn't compete as well as other cities and to think about what the region needs to concentrate on and invest in looking ahead.

Ashley Fahey
Charlotte Business Journal

View the full article here

Airbnb lashes out at Marriott as clash between Silicon Valley and the hotel industry intensifies

So much for holiday spirit. Airbnb and the hotel industry are lashing out at each other, just as the travel season kicks into gear.

On Monday, Airbnb's head of public policy Josh Meltzer sent a letter to Marriott CEO Arne Sorenson, asking him to explain to Americans "your industry's habit of taking billions of dollars from taxpayers to subsidize the construction and operation of your hotels."

The letter, a copy of which CNBC obtained, follows a Fortune interview with Sorenson last week. In it, Sorenson was asked if he thinks Airbnb has become more willing to make concessions or cooperate with regulators.

"I don't know that I see that they're more willing to concede," Sorenson answered. "They're spending a lot of money on government affairs and they're playing pretty aggressive. I've had letters from Airbnb directly, demanding my response about some charge, I don't even know what it is, within hours. That's pretty aggressive, and I'm not going to respond to that."

It's the latest phase in a tit-for-tat battle being waged in public and in the press between the Airbnb and hotels. We reached out to Marriott about Monday's letter but didn't immediately hear back.

The clash of the Silicon Valley technology disruptor and the old, slow-moving industry has been raging for years and only intensifies as Airbnb gets bigger and more influential. The hotel industry has long claimed that Airbnb skirts laws around taxes and real estate use, while Airbnb has said that hotels are doing everything in their power to protect their turf at the expense of consumers and taxpayers.

Earlier this year, an internal American Hotel & Lodging Association (AHLA) document was leaked, detailing the hotel industry's plans for limiting the growth of short-term rentals and the platforms that enable them, naming Airbnb as a threat. Marriott, Hilton and Hyatt are members of the group.

Over the summer, an ad campaign backed by the Hotel Association of New York City suggested that short-term rentals could be used to host terrorists. Airbnb countered with an ad featuring interviews of a host claiming that the home-sharing platform helped him earn additional income.

'Misleading advertisements'
Meltzer wrote in the letter that he read the Fortune interview with interest and said that Sorenson is "unwilling and unable to defend your industry's longstanding commitment to price gouging consumers, depressing wages and replacing workers with robots."

Meltzer went on to say that many of Marriott's hotels are "magnets for bad actors" and he asked Sorensen why a hotel association "has chosen to launch a series of misleading advertisements regarding safety and security."

The letter also got personal, suggesting that taxpayers have not only subsidized the construction of Marriott's hotels but also helped fund the almost $12.3 million Sorenson was paid in 2016.

Read the Airbnb letter

View the full article here

Kimpton CEO on hotel company's future, including Charlotte expansion

When did Charlotte first come onto Kimpton’s radar as a market for expansion?

When we first started considering Charlotte, we were considering a broader approach to this area of the country. We recently developed in Savannah and Nashville and Winston-Salem, and others started to show up in this radar. Charlotte became a very natural target for us. This is among the hot growth cities in the South, the South being such a great place to be right now.

We’ve been partners with the Barings company and their other iterations for the past 20 years. When we started talking about this, they wanted to do something that was completely individual and completely unique to their project. They wanted to influence it and we’re the sort of brand that welcomes that — that collaboration is important to us and important to the partnership, and to make sure that it works within the market.

But we’ve noticed especially when you’ve got a local developer with a local group of people, they really do know what the market wants, what the market needs. We riff off of that, take their inspiration and try to turn that into the business model that is our hotels and restaurants and rooftops and all the other things we do.

When you heard about Barings’ involvement in 300 South Tryon, was that when it initially occurred to Kimpton to put a hotel here, too?

Barings brought us in to be the hotel operator, but we start three years out before the hotel is built so we can be a part of that inspiration and creation.

We take it at a very textual level and they brought us in for that reason. We’re not brand-heavy; we’re property-specific heavy. That’s our focus, to make sure that we create something completely unique. We have a hotel down in Winston-Salem that is in a historic landmark building. We love not being typecast into one sort of hotel or one attitude or point-of-view.

Looking at Charlotte’s hotel market as a whole, do you believe there’s room for growth and diversification here?

I think that a lot of the hotels in this market have done some of their own repositioning and renovations and upgrades over the past several years. Sometimes that’s natural, sometimes that’s in response to new inventory coming on, but it’s all good for the city and the stock in the city. The occupancy is strong here, the corporate market and the demand generators that fill hotel rooms on Tuesday nights are very strong here. And then the leisure elements in Charlotte continue to, frankly, outperform many other markets ... there’s a tremendous demand for weekend business. What I’ve seen is a fairly consistent rate strategy that goes across the different days of the week and it stays strong and perpetual throughout the seasons of the year, too. A lack of seasonality and a strong leisure and strong corporate market make for a great hotel market.

There’s a lot of markets in the country that are a little bit oversaturated. This, we don’t think, is one of them. We think there’s room certainly for hotels, especially for boutique hotels and design-driven hotels like ours, and certainly the restaurant market in this town is still robust and people love to party and eat and drink and celebrate. Those are places we like to be

Do you see future growth here in Charlotte for Kimpton?

We’d love to. We don’t have anything on the docket at the moment but it’s our goal when we go into a market to find submarkets and sublocations, and go into these different neighborhoods and areas and try to build other types of hotels that are different. It might appeal to a different customer, whether it’s a different price point or a different style or a different neighborhood. Those are all ways that we throw in diverse inventory into markets where we already exist. In Washington, D.C., we have 10 hotels. In LA, we are about to open our fourth hotel. In Chicago, we have four hotels. That’s very common for us and we’d love to do that in Charlotte.

At one point, Kimpton was looking at opening a hotel in Dilworth. Is that neighborhood somewhere you might look at again in the future?

Yeah, we really liked Dilworth. The timing wasn’t right with the developer. We were brought in as a manager and we were helping to inspire what the property would be. But we became really bullish on that submarket, and we still think there’s room for growth in hospitality in that neighborhood and others in and around Charlotte — and in Charlotte downtown, too.

What we’re seeing in a lot of different cities is neighborhoods and areas where you wouldn’t normally have thought you would have stayed 10 years ago are now becoming places that are super cool and fun to be and where the next wave of traveler — whether it’s a mindset or an age group — is heading to those areas, and we love to be first in in those evolving areas. A little bit of grit is good for us.

What are some of the key things you look at in the site selection process?

We develop our hotels to target a certain level, a certain niche — whether it’s upper upscale or what we like to call lean luxury or luxury lite. In order to perform in that segment, you have to have a market that will support it. You’ll need the corporate demand and you’ll need high occupancy and you’ll need weekend business and demand drivers; you’ll need to be in an area or neighborhood that has that. Those are all things we look at in terms of the market dynamic. And then when we look at what product we want to bring to the market, we say, “OK, who’s going to want to stay here? How much are they going to be willing to pay based on what the guy up the street is paying?” I’m looking at a Residence Inn and the Ritz — what are they paying there? And then we target where we want to be. The product has to correspond with that positioning. There’s many elements and those puzzle pieces work together — sometimes it works and sometimes it doesn’t. This, we think, really works well.

The hospitality industry is changing so fast, with new technology and platforms like Airbnb — even within the hotel industry, there’s a lot of change and disruption. How does Kimpton stay competitive?

We think that regardless of the different niches in the market, whether it’s staying in somebody’s house or staying in a fancy hotel or staying in a hostel, people are looking for unique experiences, people are looking for something that is decidedly not home away from home — they’re looking for something different. Kimpton competes very well in there because we never do the same hotel twice, we never do the same restaurant twice. We provide really warm, welcoming service.

But we don’t rest on our laurels and we will tear up the blueprints from this building. The design in the next property that we’re opening (this) week in Palm Springs is completely different and completely Palm Springs, and that’s what I love about our approach — there’s no Kimpton in a box.

Ashley Fahey
Charlotte Business Journal

View the full article here

Marriott is developing the hotel room of the future in its HQ basement

The hotel room of the future is coming together — in a Bethesda, Md., basement.

Marriott International (NASDAQ: MAR) has partnered with Samsung Electronics Co. Ltd. and Legrand to build a pair of connected “internet of things” hotel rooms in the basement of Marriott’s Bethesda headquarters. The IoT Guestroom Lab, part of Marriott’s 10,000-square-foot Innovation Lab, was designed to explore everything from intuitive lighting to voice-activated room controls to virtual assistants.

The team will analyze feedback to the internet of things rooms over the next three months before taking both down. In a release, Marriott said its customers will start to see elements of the technology in hotel rooms in the next five years.

The internet of things is essentially device-to-device communication. Imagine, if you will, a hotel guest extending a laptop screen to the room’s TV, a desk light with adaptive brightness or a shower that can be turned on by voice. Marriott envisions a customer being able to order a wake-up call via a virtual assistant or to launch a yoga routine on a full-length, digital mirror. 

The room, in theory, would be largely controlled by apps and systems that remember a visitor’s preferences and past behaviors. It is powered by three linked networks and could power down automatically when the customer leaves.

Travelers in the Queen City have already gotten a glimpse inside the future of Marriott hotels. The global lodging company unveiled its first-ever "hotel idea incubator" during the grand reopening of Charlotte Marriott City Center in October 2016.

As part of a $40 million full renovation of the uptown hotel at 100 W. Trade. St., the 446-room property received three new dining concepts, a futuristic front check-in lobby, and other tech features that will give guests a new take on the traditional lodging experience. That included allowing customers to test new product and service concepts first-hand while providing real-time feedback to Marriott.

Marriott International encompasses a portfolio of 6,400 properties across 30 brands in 126 countries and territories.

The internet of things room, when it is rolled out, will not be cookie cutter, a Marriott spokeswoman said — different properties might want different features. But it will be, the company said, seamless, transparent and flexible, “while customers would enjoy an integrated experience with access to their own data and information, as well as accessible voice and mobile-optimized controls.”

As a tech company, Samsung develops everything from TVs to smartphones to wearable devices, network systems and digital appliance. Legrand, a French company, specializes in electrical and digital infrastructure.

View the full article here

Hitting reset on the NASCAR Hall of Fame

Executives at the Charlotte Regional Visitors Authority dread hearing the rosy projections made for the NASCAR Hall of Fame in the months before the $200 million, publicly funded racing shrine opened in 2010. At the time, the visitors authority, under a different CEO, predicted first-year attendance of 800,000 and an operating profit of $800,000.

Instead, actual first-year attendance stalled at less than 300,000 while the museum posted an operating deficit of $1.5 million.

Since then, the narrative for the CRVA-run hall of fame has shifted. After several years of disappointing results and constant media attention about missed attendance and revenue forecasts, the visitors authority stopped providing monthly attendance updates. More recently, the agency shifted its financial reporting to a consolidated figure, dropping its previous venue-by-venue profit-and-loss calculations. The authority manages the convention center, the hall of fame, the Bojangles’ Coliseum-Ovens Auditorium complex and handles setup and back-of-house services at the NBA arena. It also recruits conventions and events and promotes the area as a travel destination. Combining all of those operations with the hall of fame into one consolidated figure makes it impossible to know whether the NASCAR Hall of Fame has, or ever will, reach break-even, as promised by city executives in 2015.

CRVA CEO Tom Murray, during an interview this week at his uptown office, offered a potential headline for the organization’s annual report. Referring to the portion dedicated to the NASCAR Hall of Fame, he said, “Revenue up by 7.6%.” 

Murray did not mention another possible headline: “Attendance down by 7.8%.”

Later in the interview, referring to the attendance dip, Murray attributed most of the decline — 10,000 of the 13,000 fewer attendees — to private event business that proved more lucrative in actual dollars than the previous year by 19%, but totaled fewer people.

    Losing momentum?  The city committed to backing the $200 million NASCAR Hall of Fame based on attendance projections of 800,000 in the first year. It failed to reach even 300,000 in 2011 and attendance never again eclipsed 200,000. 


Losing momentum?
The city committed to backing the $200 million NASCAR Hall of Fame based on attendance projections of 800,000 in the first year. It failed to reach even 300,000 in 2011 and attendance never again eclipsed 200,000. 

“I like to say you can’t take event attendance to Bank of America to put in our account,” Murray said. “We put cash into our accounts and, so, the revenues are clearly more important.”

Murray and Winston Kelley, executive director of the hall of fame, pointed to what they described as a successful change in strategy at the NASCAR museum as the most important takeaway from the revenue gain in fiscal 2017. (The hall of fame operates on a July 1-June 30 year.) For several years, the visitors authority has emphasized the museum as an asset to help lure conventions and as a private event and meeting site. 

The hall of fame is booked for 300 private events a year at rates of $500 to $6,000 each. In many cases, depending on the size of the private event, exhibit tickets and CRVA-provided food and drinks can — and, in certain cases, must — be purchased.

Murray explained the business shift at the hall of fame as a mix of 40% generated by general admission ticket sales, 40% through private events and 20% from sponsorships and parking. The annual report submitted to Mayor Jennifer Roberts and City Council this week did not include a breakdown of revenue, instead stating the overall gain of 7.6% over fiscal 2016 to $6.7 million. The visitors authority targeted 5% revenue growth for fiscal 2017.

Ron Kimble, a former deputy city manager and city manager, said in 2015 the hall of fame reduced deficits that year to $500,000. He predicted it would break even in 2016. Whether it did remains unknown because the visitors authority stopped calculating operating profits and losses for the hall of fame and other venues, basing the decision on its “One CRVA” operating system that allows multiple venues and divisions to share employees and services such as accounting, maintenance, marketing and human resources.

The hall’s construction debt and exhibits are paid from funds generated by an additional 2% room tax on local hotels passed in 2006. Mohammad Jenatian, head of the Greater Charlotte Hospitality & Tourism Alliance, told the Charlotte Business Journal that, while there is always room for improvement in ticket sales and attendance, those aspects have never been a focal point for the tourism industry.

Jenatian emphasized the industry is paying for the NASCAR museum through the room tax and, despite the hall of fame’s ups and downs, hotel executives and others see the larger benefit of having it here. “Other people have complained about the NASCAR Hall of Fame and attendance. We couldn’t care less about how many tickets are sold.”

Instead, Jenatian said the industry considers the museum to be one of the best and most important investments in Charlotte to support tourism. Building the hall of fame reinforced the region’s commitment to NASCAR itself, helping retain race-team headquarters in and around Charlotte while also bolstering the case for Charlotte Motor Speedway to remain the host of the sport’s annual all-star event.

Without the hall of fame, Jenatian said it’s likely the all-star race would have been moved to another city. Combined with the speedway’s Coca-Cola 600 race, held in Charlotte each May the week after the all-star event, racing-related spending contributes $230 million to the local economy, according to speedway-commissioned estimates. Independent economists routinely dispute sports-tourism impact estimates, saying they are usually worth about 10% of the published figure and largely represent a reshuffling of existing entertainment spending.

Beyond keeping events and much of the NASCAR industry in Charlotte, Jenatian agreed with visitors authority CEO Murray that the uniqueness of the racing museum continues to be a boon to help bring meetings and conventions to town. Hotel occupancy and room rates, among other industry measures, have been on a mostly steady rise in recent years, a trend Jenatian credited, in part, to the hall of fame.

Without it, he added, the city would not have landed the 2012 Democratic National Convention, the largest and highest-profile convention in the city’s history.

“The hall is an advantage for us when we’re trying to attract meeting planners,” Murray said. “They really are thrilled with the space. They tell us that in surveys. We know that it is authentic to Charlotte.”

NASCAR teams, sponsors and drivers have increasingly relied on the hall of fame as a go-to venue for press conferences and announcements, bringing media, fans and attention to the venue. Murray and Kelley offered a muted response to questions about the fading appeal of NASCAR itself. Ticket sales and TV ratings in NASCAR have declined at much higher rates than in rival leagues such as the NFL, NBA and Major League Baseball, but Murray waved off the notion by saying all sports and entertainment properties are grappling with pressures from digital media and shorter attention spans. In addition, the “bucket list” aspect of visiting a hall of fame for die-hard fans makes the Charlotte NASCAR museum different than attending a regular-season race, Murray said.

New and refreshed exhibits, including one dedicated to the Disney Cars movie franchise, continue to score well with visitors, Kelley said.

Recent and upcoming changes in operations include the first ticket price increase since the museum opened. In July, admission went to $25 from $19.95. Kelley noted the new price includes tax; with tax, the old rate was $21.40. Next year, the visitors authority plans to take over the museum merchandise store from an outside operator, a move that is expected to boost profitability while increasing flexibility.

Here's where the jobs are- in one chart

The U.S. economy created 261,000 jobs in October as the economy rebounded from hurricane-related disruptions. But as always, there are industries that are doing better or worse in terms of employment each month.

Here are the net changes by industry for the month of October.


The leisure and hospitality industry was the big employment-gain leader for the month. The government explained the rebound as an after-effect of the recent hurricanes.

"Employment in food services and drinking places increased sharply, mostly offsetting a decline in September that largely reflected the impact of Hurricanes Irma and Harvey," the Bureau of Labor Statistics said Friday.

The professional and business services industry added 50,000 jobs in October, which is roughly the average monthly gain in the previous 12 months, according to the government agency.

Manufacturing jobs increased by 24,000 with gains from computer electronics, chemicals and fabricated metals companies. The government noted 156,000 total manufacturing jobs were added since November 2016.

Health care was also a bright spot in the report, gaining 22,000 jobs in the month. The industry has added 24,000 jobs on average per month so far this year versus the 32,000 average rise last year.

On the flip side, the retail industry suffered the biggest job losses as the sector continues to lose market share to e-commerce companies like Amazon.

Read the full article here

ACC commissioner talks NCAA reform, more Charlotte tournaments

Atlantic Coast Conference commissioner John Swofford came to Charlotte on Wednesday to help start the hype machine on another season of college basketball. Predictably, it turned into one of Swofford’s toughest assignments in his 21 years running the Greensboro-based ACC. 

The reason? College basketball, including schools in Swofford’s conference, faces tawdry bribe and fraud allegations as part of a recently disclosed FBI investigation — and the uncertainty of more revelations surfacing in the months ahead.

It’s been a long month for Swofford and everyone else in college sports. On Sept. 26, the ACC commissioner was wrapping up a meeting with athletic directors in Washington when phones began lighting up with text messages and news alerts detailing the extensive accounts of corruption and cheating in college basketball. Everyone was shocked by what they heard, Swofford recalled.

In September, the FBI arrested a handful of assistant coaches at prominent college basketball schools while publicly unveiling findings from undercover probes. The revelations included detailed accounts of pay-to-play schemes designed to steer players to specific schools based on kickbacks among various middlemen, shoe companies, coaches and amateur team organizers. 

Among the most noteworthy developments in the federal probe: Louisville, an ACC member since 2014, fired its men’s basketball coach, Rick Pitino, and its athletic director, Tom Jurich, in part because of possible recruiting violations and payoffsfollowing separate, recent rules violations. 

Louisville — already facing the prospect of losing its 2013 national championship because of a sex-escort scandal involving recruits and the basketball program — benefited from a pay-to-play arrangement that included an alleged $100,000 payment to a top recruit who signed with the school to play basketball, according to numerous reports based on thinly veiled descriptions in the initial investigation disclosure.

Nearly all of the questions Swofford faced from reporters on Wednesday in Charlotte regarded the plausibility of effective reforms within the sport and concerns about other findings that could emerge from the federal investigation. The commissioner said he doesn’t believe cheating and violations are “rampant” in college basketball while calling for officials at all levels — amateur, college and the NBA — to work together to usher in reforms. 

An NCAA committee formed this month and led by former Secretary of State Condoleezza Rice as well as an internal ACC group studying possible changes to reduce cheating in college basketball should help improve the situation, Swofford said.

This month, another ACC school, UNC Chapel Hill, escaped NCAA sanctions in a long-running academic fraud scandal that included revelations of numerous football and men’s basketball players maintaining their athletic eligibility by taking sham courses. Critics, and there are many, pounced on what they described as legal loopholes that allowed UNC to avoid major penalties despite an investigation that showed a large number of the students taking the so-called “shadow classes” over an 18-year period were athletes.

The 15-member ACC is one of the Power Five conferences in college sports that account for high-revenue TV rights fees, corporate sponsorships and send their schools to the men’s Final Four and the College Football Playoff on a regular basis.

Beyond the recent scandals, Swofford, as head of the ACC, works with university presidents and athletic directors to find new sources of income, retain and increase existing media and corporate alliances and steer the league so that it can compete with its peers in the SEC, Pac-12, Big Ten and Big 12.

Charlotte has long been a second home of sorts for the ACC. The conference football championship has been played at Bank of America Stadium since 2010 and is under contract here through 2020. The lone exception: last year, when the ACC Football Championship moved to Orlando because of controversy over House Bill 2 in North Carolina. Soon after the state repealed the law — which limited anti-discrimination protection for LGBT people — in March, the conference said it would return to Charlotte beginning in December 2017.

In 2019, Spectrum Center, the NBA arena in uptown, will host the ACC men’s basketball tournament. When that happens, Charlotte will have hosted 13 times, second only to Greensboro. (Raleigh’s Reynolds Coliseum, then the home of N.C. State, hosted the first 13 ACC tournaments from 1954 through 1966. The conference later moved to neutral-site venues.)

ACC football teams have been a constant in Charlotte’s annual Belk Bowl, played since 2002. In September, N.C. State played South Carolina in a Labor Day kickoff game at Bank of America Stadium, part of a series of annual opening weekend games in Charlotte that will often, but not always, feature ACC schools.

The city’s biggest ACC loss since the HB2 boycott last year was the recent decision by ESPN to base most of its ACC-dedicated cable TV network at the media company’s Connecticut headquarters instead of Ballantyne. ESPN’s satellite location here is home to its SEC-branded cable network, but financial pressure caused by subscriber losses and other factors led to the ACC Network not being housed here. Previously, Swofford expected the network to be here. It is scheduled to go on the air in 2019.

Charlotte’s BB&T BallPark could be in line to land future ACC baseball tournaments, Swofford said, noting that the conference will soon decide whether it wants to stay at its current site in Durham or rotate among cities in its next cycle of tournaments. 

Durham’s Triple-A baseball stadium has the ACC tournament through 2019.  

The ACC tournament was played at Knights Stadium in nearby Fort Mill in 2000 and 2001. BB&T BallPark opened in 2014 and, unlike its predecessor, is located in uptown within easy walking distance of hotels and restaurants for fans and teams. Another factor that could help Charlotte’s baseball bid: ACC school Duke plays its home games at the Durham Triple-A stadium, a situation that rankles some rivals and could motivate them to try a different venue.

Swofford spoke at The Ritz-Carlton here as part of the annual ACC men’s basketball media day and then discussed a range of business issues with CBJ in a separate one-on-one interview. Below are excerpts from our discussion, edited for length and clarity.

On whether the scandals have caused concerns among ACC sponsors: I haven’t heard a word from any of them.

On whether the scandals could affect the popularity of college basketball: I don’t think so, I don’t think we’re anywhere near that. 

In the worst-case scenario, I think you could get to that point. One of the things we always have to protect, particularly in college athletics, is the trust factor with our fans and supporters.

Because they want to support their school and feel that their school is doing things the right way. If you ever undermine that trust with your fan base, particularly in college athletics, it can have negative implications from a pure business standpoint.

I don’t think we’re anywhere close to that. In the worst-case scenario, it could get to that.

On how he learned of the FBI findings: I was in a meeting in Washington with our athletic directors on the morning this came out and literally started popping up on the phones as we were concluding our meeting. And it was, like, what in the world is this? Because nobody had any inkling of it.

Now, you can have concerns about, “Yeah, there’s something that doesn’t look right over here” or “Something’s going on here,” but you don’t expect a federal investigation into bribery, et cetera, related to college sports.

I think anybody who said they expected that would be less-than-honest. I certainly didn’t expect it.

You don’t expect a federal investigation. That takes it to a whole other level.

On dealing with the bribery and academic scandals:It’s issues that you’d rather not have in the first place. But, when they’re there, you deal with them and you deal with them as effectively as you can and you move on. It’s not a fun part of what we do. But, unfortunately, it’s a necessary part, periodically, and so you do the best you can possibly do.

On the ACC Network: I could not feel better about the lead-in to the launch. The Altice (carriage deal with ESPN) was significant (because the No. 4 cable company agreed to carry the new ACC Network when it goes on the air in 2019). And (Altice) had not taken the SEC Network (also owned by ESPN) previously.

And it’s New York City (cable subscribers, too). 

We’ve had superb meetings in terms of beginning discussions of how we connect the different aspects of the channel. We’re beginning discussions about the marketability of it, the sales aspect of it, what we want it to look like, what personality do we want it to have. And the energy I see at ESPN is off the charts — they see this as a huge opportunity just like we do.

This is a tremendous opportunity for ESPN to grow and to grow revenue and there aren’t but so many of those.

On the return of the ACC Football Championship: I was worried about it, (but things look) great. Last year when we made the decision to leave (because of HB2), we were ahead of any other year in (advance) ticket sales since the game had been in Charlotte.

Just from a pure business standpoint, that made the decision even tougher. But, we’re above that pace (in 2017) and I wasn’t sure we could do that.

I thought coming back a year later — I didn’t think Charlotte was going to abandon us or anything like that — but I didn’t think we’d keep the same pace. But we’re in the best shape we’ve ever been.

On the future of the football championship: I would be very surprised if we didn’t (stay in Charlotte beyond 2020). We’ll get out ahead of that by several years.

On the ACC basketball tournament’s future in Charlotte: I don’t know (whether it will be 11 years between tournaments here in the future). My guess is it will probably be a little more frequent. This next rotation that we will make a decision on will be kind of telling.

I don’t think any of us have any doubt that Charlotte will be an excellent experience. Washington (in 2016) was outstanding, New York (last year at Barclays Center in Brooklyn, where the 2018 tournament will also be held) was an excellent experience.

My guess is it’ll be more frequent (than it has been in Charlotte of late).

The newer members of our league, they’re used to the Big East tournament (that was played in New York). They’re used to airport accessibility, they’re used to good restaurants and hotels in close proximity — Charlotte fits the bill on all of that. 

And the size of Spectrum (Center) fits us well. We won’t go back to a dome (as the ACC did in Atlanta in 2001 and 2009 at the Georgia Dome). We’ve been to Atlanta since then, but we went to (the NBA arena there).

Erik Spanberg
Charlotte Business Journal

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Charlotte MLS expansion bid for December deadline is dead

The head of the city’s economic development committee told the Charlotte Business Journal on Monday that Charlotte’s bid for the first round of Major League Soccer expansion is dead — and the lead investor for a local team confirmed it. Charlotte is one of 12 cities competing for two new teams to be awarded in December and begin play in 2020.

James Mitchell, a council Democrat who has been the most enthusiastic local politician in support of using tourism tax money to help build a $175 million stadium for a new team, said the combination of upcoming elections and a competing bid by Nashville dashed any remaining hopes. Tension and, ultimately, disagreement last summer between city and county government over funding the stadium started the backslide.

For the past couple of months, Mitchell and representatives from MLS4CLT, the private entity formed to own an expansion club, have tried to keep dwindling hopes alive for the December selection. Speedway Motorsports CEO Marcus Smith leads MLS4CLT and has committed to pay the $150 million fee to acquire a team if Charlotte’s bid succeeds.

“It’s disappointing that it looks like we’re not going to be able to make that deadline,” Smith told me Monday. “I’m disappointed for the 50,000 families whose kids play soccer every weekend and I’m disappointed for all the fans who told us they were excited about having an MLS team (come to Charlotte).”

Last week, his chief strategy officer, Mike Burch, told me MLS4CLT was waiting to hear from the city about possible stadium sites. Mecklenburg County owns 16 acres on the edge of uptown, where a new 20,000-seat, $175 million stadium was proposed and approved by county commissioners in January.

That plan unraveled when city government opted against matching the county’s $43.75 million investment to pay a combined 50% of the construction cost. When the city declined an offer from the county to take control of the land for soccer but only if the stadium was fully funded by the city and MLS4CLT, a scramble ensued to find alternate locations.

On Monday, Mitchell told me city administrators and the committee have run out of time and won’t be able to cobble together an MLS proposal by December. Mitchell said the city would be interested in trying to help with a stadium plan for the next round of bidding, which the league has said will be its final expansion, to 28 clubs.

The league has said it will add two more teams at an undetermined date — opening the door for Charlotte and other cities that lose out in December — but the entry fee is all but certain to go up. Burch, of MLS4CLT, told me last week that any increase to the entry fee would require new analysis to determine whether the team could still be competitive on the field and whether Smith’s ownership group could still make the business side a success.

Smith said Monday he is uncertain whether MLS4CLT will pursue the next round of expansion. He praised Mitchell for leading the political effort to help bring a team to Charlotte “in spite of a lot of headwinds.”

The councilman cited a proposal in Nashville for a $250 million, 27,500-seat stadium as an example of the kind of competition Charlotte can’t match. At least not immediately.

“The Nashville proposal is a game-changer,” Mitchell told me. “We can not come anywhere near the Nashville proposal.”

An MLS spokesman did not immediately respond to a request for comment.

A city spokesman in Nashville told CBJ the council will consider the stadium on Nov. 7. The sports authority and the board that runs the city fairgrounds — 1.5 miles from downtown, where the MLS stadium would be built — have already approved the plan, the spokesman said. 

Nashville is touting its stadium pitch as one that would be paid for with private money accounting for 90% of the cost. It includes $25 million in cash from the local ownership group, $25 million in bonds for related site work that would also benefit the fairgrounds and $200 million in public bonds to be repaid by the team at a rate of $13 million annually.

It also includes a ticket tax that will help repay bonds and, after an increase in later years, provide money for stadium improvements.

Another rival bidder — Sacramento — broke ground in July to begin site preparation for a proposed stadium as an indication of its commitment toward MLS. More recently, the Sacramento ownership group landed a five-year jersey sponsorshipcontingent on landing an MLS team. In soccer, jersey sponsors are the most lucrative and most important for a team.

Next month, voters will decide all 11 council seats and the next mayor. Incumbent Jennifer Roberts, a Democrat, lost in the primary in September. Vi Lyles and Kenny Smith, the Democratic and Republican mayoral candidates, respectively, have both said during the campaign they do not support using city government money to help pay for a soccer stadium.

At least five of the 11 council members will be newcomers when the council and next mayor take office in December. Smith told me Monday that an MLS bid must include at least some public financing or else it will fail.

Last week, an MLS supporters’ group known as The Queen’s Firm began campaigning for a team here. Co-founder David Dowell told me Monday that, as long as there is a chance to bring an MLS club to Charlotte, his group will try to help the cause. Queen’s Firm has 150 members and a mailing list of 3,000 people and is seeking more members online and through soccer watch-parties at uptown sports bar Courtyard Hooligans. 

Erik Spanberg
Charlotte Business Journal

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Charlotte city government hopes to stem CIAA incidents

City leaders on Thursday continued grappling with isolated but highly publicized shootings during the Central Intercollegiate Athletic Association tournament week — and again endorsed the idea of new ordinances and permitting rules to better ascertain potential trouble areas.

In each of the past four years, shootings and fights during the annual CIAA tournament week have sparked questions about whether the city should keep hosting the event. The CIAA is made up of 12 historically black colleges and universities, including Johnson C. Smith University in Charlotte.

The tournament runs Feb. 27 through March 3 next year. Spectrum Center, Bojangles’ Coliseum and the convention center, all city-owned buildings, host the tournament games and fan festival. Charlotte has been home to the conference basketball tournament since 2006. The CIAA stands as the city’s most lucrative annual tourism event and is under contract to be played here through 2020.

In February, 100 shots were fired uptown near the Spectrum Center just before the CIAA championship game started. No one was injured. Police arrested three men for shooting at a hotel uptown in the early-morning hours following the end of the tournament in 2016. No one was hurt during that incident, either.

Injuries from shootings and stabbings at CIAA-themed events and parties in earlier years also raised questions about tournament safety.

During a City Council committee meeting on Thursday, city staff outlined possible solutions to stem the isolated violence, including a requirement for property owners to be held liable for unsanctioned pop-up parties and concerts around large events, including the CIAA tournament. The current policy is that promoters must secure permits and, since many promoters are based elsewhere, it’s hard to gain much cooperation if something goes wrong, city staffers said.

Shifting responsibility to property owners for so-called pop-up events through permitting requirements and other rules would likely help reduce crime risks.

Danny Pleasant, an assistant city manager, told the committee, “The more we know in advance, the more prepared we can be.”

Council members, tourism executives and the CIAA have said the violence has created a misperception about the tournament. All of the shootings and altercations occurred at parties, concerts and locations beyond the conference’s control. Julie Eiselt, a Democrat who also leads the community safety committee, said, “Unfortunately, scary things have happened at the time of the CIAA. The CIAA (tournament) is separate from that.”

There is no defined timetable for crafting an ordinance or other rules, but the city hopes to have something in place before the 2018 CIAA Tournament. The full council would have to approve any new ordinances.

Designated event zones that could be controlled by the CIAA and other organizers of large-scale tournaments, parades and festivals in Charlotte might also be part of the solution, Pleasant said Thursday.

City attorney Bob Hagemann and Pleasant heard committee members’ questions and concerns — several called for any new rules to avoid infringing on football tailgate parties, for example — and said they are continuing to research language and guidelines.

Carlenia Ivory, a Democrat, and Ed Driggs, a Republican, said the new policies under discussion are appropriate and could help, but also fall short of a larger problem of violence plaguing the city.

There have been 72 homicides to date in 2017, compared with 68 last year and 60 in 2015.

“I have a problem with us paying all this money to investigate four shootings versus what’s happening with the other 70,” Ivory said.

Driggs urged his colleagues “not to avoid some of the really thorny questions that do tie to race relations” and said “the real challenge ... is to not let it get politicized.” 

Driggs told me in a later interview that part of his concern is that when violence occurs around the tournament, the perception of public safety risk can infringe on the larger policy discussion of how to address economic inequality, affordable housing and social justice.

CIAA fans spent $27 million this year on hotel rooms, meals and other expenses during the tournament in Charlotte, according to research figures provided by the conference. That represented a decline of 14% from 2016.

Hagemann told the committee Thursday that violent incidents occurring at carnivals in the Charlotte area led council to pass an ordinance in 2004 mandating promoters hire CMPD or private security to improve safety. Soon after, carnival promoters stopped coming to Charlotte, Hagemann said.

Erik Spanberg
Charlotte Business Journal

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Charlotte establishment among world's top historic hotels

This uptown Charlotte hotel nabbed top honors at the Historic Hotels of America Awards of Excellence.

The 60-room Dunhill Hotel was named as the Best Historic Small Inn or Hotel.

A pool of 200 historic properties was whittled down, with 19 hotels from across the globe honored. The Dunhill was one of six properties vying for that best small inn honors.

The annual awards recognize innovative leadership and stewardship as well as preserve and celebrate the history of these properties.

The Dunhill Hotel is Charlotte’s only historic hotel. John Beatty is its general manager.

That property at 237 N. Tryon St. opened in 1929 as Mayfair Manor. It weathered the Depression by renting residential space.

The Dunhill is home to 2,500 square feet of meeting and function space, available for weddings and business as well as The Asbury restaurant.

The Dunhill is operated by Summit Hospitality Group in Raleigh.

Jennifer Thomas
Staff Writer, Charlotte Business Journal

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Charlotte tourism exec touts "new demand" of convention hotel

Tom Murray wants more rooms and more inns. Or at least one more inn with 800 to 1,000 rooms.

As reported by CBJ last week, Murray, CEO of the Charlotte Regional Visitors Authority, has begun making the case for a second convention hotel here. Recent presentations to trade groups and other discussions are aimed at building consensus on what could be a controversial pitch for using taxpayer money to help pay for a new hotel.

It’s a model used often in other cities across the country. And there is precedent in Charlotte, where the 700-room Westin opened in 2003. Murray said it will probably take at least four years to secure a project, win approval and complete construction.

The Westin Charlotte remains the city’s largest hotel and a convention hub given its proximity to the Charlotte Convention Center. Renovations of the convention center scheduled to be finished in 2021 include a pedestrian bridge connecting it with the Westin and the adjacent Novel Stonewall Station project. The $110 million makeover will be paid for with existing tourism tax money.

Tourism and political leaders supporting the convention hotel say Charlotte has begun to miss out on events because planners don’t want to have to negotiate with multiple hotels when they can go to similarly sized cities and secure blocks of rooms with one or two large hotels. And, the argument from Murray and other goes, adding a major convention hotel will lift demand for all hotels.

Similar cities including Austin, Baltimore, Indianapolis and Nashville have all added major convention hotels in recent years. Others with new convention hotels already open or in the works include Cleveland, Houston, Kansas City and Portland.

Industry analysts estimate the likely taxpayer investment in a convention hotel would be 30% or more of the construction price, the equivalent of $100 million or more based on a 1,000-room property with a price tag in the range of $350 million.

There are 26,000 hotel rooms in Mecklenburg County and 5,000 in uptown.

The visitors authority has 220 employees and an annual budget of $60 million. It recruits meetings, conventions, conferences and sporting events and also promotes the area for leisure travel. In addition, the authority runs the regional film commission and operates city-owned properties including the NASCAR Hall of Fame, Charlotte Convention Center, Bojangles’ Coliseum and Ovens Auditorium as well as engineering, maintenance and cleaning at the NBA arena.

Murray, who was chief operating officer at InterContinental Hotels Group (NYSE:IHG) and CEO of a New York-based cruise business before coming to the visitors authority in 2011, spoke with me as part of a recent interview about adding a convention hotel. Following are excerpts from our conversation.

On the early discussion of a new large-scale hotel: Years before I got here, people were talking about the need for a convention center hotel. These hotels attached to convention centers are a way to reduce your risk on building full-service hotels. So hotel developers are more interested in them.

And there’s been folks coming to this market to talk to us about our interest in that as well. We’re not anywhere far with anybody, we’ve just had some conversations, but it is a topic of conversation.

What they said in the Atlanta Business (Chronicle) article was that a lot of these end up having some element of public-private partnership associated with it. And so that is always a challenge when you start to talk about the use of our tax funds and the public-private partnership, and so we’re starting to prepare people for an argument about why you need a convention center hotel.

On why a new convention hotel is needed: The real base of this argument is, does it take business away from existing hotels? Or does it add to the pie, does it grow the pie bigger?

Hotel operators were concerned when I said we were going to build big competition for them. And so we’re just trying to make the case, as we’ve done with the Westin, when the Westin came into the market, nobody’s occupancy went down (based on statistics from independent industry analyst STR). Everybody went up and prices went up. (STR statistics show gains in the Charlotte market after the Westin opened until the recession hit in 2007; hotels began rebounding in 2009 and have shown consistent gains since until a slight dip in recent months.)

On where the money could come from if city council approved funding for a convention hotel: The uses of hotel taxes are up to the council. We’ll present to the council in conjunction with the city staff (possible) options, like we have with MLS soccer or with the amateur sports facility or any of those kinds of things.

It’s no secret that, in the long-range planning for (existing tourism) tax funds that we presented prior to the MLS project we presented to the city council, one of the projects we’re holding potential funds for is a convention center hotel. Knowing that the marketplace is rife with folks and cities that are going out and doing this same thing.

That’s our competition. One of the reasons we’re doing the convention center expansion is that we need to make sure we’re staying competitive against these other cities. Also, in this study (by consultant Jones Lang LaSalle on Charlotte convention business), they talked the city’s need for a large hotel in the uptown market because of the challenges that having to negotiate with multiple hotels make. (In Charlotte you may have to work with) two times as many hotels for the same block (of rooms) for a particular hotel planner.

On challenges: What is true is we’ve been keenly focused on staying up with the competition and we see they’re winning this race a little bit. We’re still a city with high demand and we’re one of those cities that other cities look to, but there are some leading cities out there like Indy and Austin that are getting the large hotel development before we are. And part of that is because of that rate gap (when some of those cities generate higher room rates on a consistent basis).

On initial response from hotels in Charlotte: The hotel community understands the unique nature of large hotel growth. Hotel growth is going to happen in this marketplace, but hotel growth that generates additional demand is the more attractive growth. The organic growth of smaller hotels is happening, but there is no evidence that that brings new demand. It eats existing demand. What we’re trying to do is bring hotel growth that makes the pie bigger. That’s why 1,000-room hotels are not 150-room hotels.

Erik Spanberg
Charlotte Business Journal

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Will millions of taxpayer dollars bring amateur sports bonanza to Charlotte?

A plan to build an indoor amateur sports complex near Bojangles’ Coliseum fizzled in 2014, but Charlotte tourism officials are trying again, hoping the promise of millions of dollars of public money will entice a developer.

The plan calls for a “destination-defining” indoor facility, with room for 10 high school regulation basketball courts and the ability to convert the space for 20 volleyball courts. There would be seating, restrooms, and food and beverages for sale.

The new plan would allow the sports complex to be built anywhere in the city – not just in economically struggling east Charlotte.

But it’s unclear whether the amateur sports complex would be the best use of the money, which would come from hotel/motel taxes that are restricted for tourism.

Would the new complex create new business – or just take away existing tournaments and events from the publicly owned Charlotte Convention Center?

There is also intense competition for basketball and volleyball tournaments, as Rock Hill is starting construction on a facility that’s almost identical to what Charlotte is considering.

“What kind of return is the city going to get?” asked Ron Esser, co-owner of Carolina Courts, a private indoor basketball and volleyball center with locations in Indian Trail and Concord that would be a competitor to the Charlotte venue. “It’s going to be tough to keep 10 courts completely full. There will be down times.”

He said each of his locations has four basketball courts each.

“We are carrying debt on eight courts of $5 million or $6 million, and we are barely making it,” he said. “If we had to carry $12 million in debt, we would be bankrupt in a year.”

Filling buildings

Charlotte’s first attempt at an indoor amateur sports complex was focused on the parking lot behind Bojangles’ Coliseum and Ovens Auditorium. The city wanted to build a hotel and gymnasium on the site, but it received interest from only one private developer, Florida-based GoodSports. But GoodSports never secured the financing for the project.

The city was prepared to spend up to $25 million on the project, but the deal fell apart.

The Bojangles’ site is now off limits because the Charlotte Area Transit System wants to build a light-rail line and station through the parking lot.

The Charlotte Regional Visitors Authority gave City Council’s economic development committee an update on the new plan last week. The city and the CRVA hope to enter into an agreement with a developer by the end of the year, if council members approve the plan.

The CRVA’s presentation did not give an estimated cost of the complex, though Rock Hill is spending more than $20 million. The CRVA said the private developer would have to pay at least half of the construction cost.

The CRVA already hosts large basketball, volleyball and cheerleading tournaments at the Charlotte Convention Center uptown. The center’s cavernous exhibit halls are converted to temporary courts, and the building can host numerous games at once.

The convention center’s bathrooms don’t have locker rooms with showers, but there is a food court already in place.

The CRVA said basketball, volleyball and cheerleading events generated 15,000 hotel room nights last year. That’s about 10 percent of the convention center’s total business for the year, which was 142,000 hotel room nights.

Building a new amateur sports facility could shift those events to a private developer and away from the taxpayer-owned Convention Center, which has seen its attendance and events drop since 2011. The CRVA is planning a $100 million renovation of the center to attract more business.

“We are about bringing business into the community, whether it’s in our building or other buildings,” said Tom Murray, chief executive of the CRVA. “We want to bring business that will fill multiple buildings. We think we’re desirable enough to continue to attract events (at the Convention Center).”

The new building would also face competition from Rock Hill’s new indoor sports complex, scheduled to open at the end of 2018. The Rock Hill complex will have 17 volleyball courts, 10 basketball courts and a championship arena with seating for 2,500 people.

“Ours is supposed to be the biggest in three states,” said John Gettys, chair of the Rock Hill Sports Commission.

In an interview, Gettys joked that Charlotte shouldn’t build its own indoor sports facility – “You don’t want to do that,” he said, suggesting that a new Charlotte facility would compete with Rock Hill’s clients.

But Gettys said he thought the two facilities could complement each other, even if Charlotte built its complex in south Charlotte, within 10 or 15 miles of Rock Hill.

“If you have them in some proximity, you can bring in even better tournaments,” he said.

Murray agreed.

“The truth is there is a lot of competition in the amateur sports business,” he said. “We hope to build a venue that’s highly competitive, and additional facilities (such as Rock Hill’s) might supplement what we do. These tournaments are so big that they need multiple locations.”

The CRVA said amateur sports overall – including sports such as softball and soccer – generated 215,000 hotel room nights last year.

Steve Harrison
Charlotte Observer

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Kimpton Tryon Park GM on what to expect when uptown hotel opens in October

Robert Hannigan has worked with San Francisco-based Kimpton Hotels & Restaurants for a decade, leading operations for hotels in Washington, D.C.; San Diego; Los Angeles; and Portland, Ore.

He's now come to the Queen City as the general manager for Kimpton Tryon Park Hotel, the 217-room hotel at Third and Church streets that's on track for a late-October opening. Among other duties, Hannigan is tasked with filling about 200 hotel and food and beverage positions, ranging from managerial roles, sous chefs, bartenders, room attendants and banquet chefs.

Hannigan is hoping Kimpton's accolades-earning employee culture and benefits will help draw in the best talent for those positions, though he acknowledges that the competition for labor is fierce, especially with the significant supply of hotel rooms coming online in the next several quarters.

"There’s always a concern about finding not only the right number of people, but the right people themselves," he said. "But we're going to keep looking."

Finishing work is underway at Kimpton Tryon Park, with furniture being loaded in and rooms on floors four to 10 at a significant completion point. Construction remains underway for the hotel's ground-floor Italian restaurant, Angeline's, and a rooftop bar called Merchant & Trade.

Hannigan recently spoke to the Charlotte Business Journal about the upcoming hotel, what the Kimpton brand is about and his take on the local hotel market. Excerpts have been edited for brevity and clarity.

What would you say are some of the key characteristics of a Kimpton hotel?

It’s very entrepreneurial. In a lot of other working environments in the hospitality industry, I was handed a set of rules — "Do this, say that" — and that's good. It taught me consistency and a good foundation for the operational environment. With Kimpton, we have the same benchmarks we have to hit: we have to have happy employees; we have to have a profitable business; we have to have a highly regarded hotel within our community; obviously, we have to have happy guests. But how someone gets there is left up to the individual property within that market.

We say, "OK, how do we make this brand and this hotel successful in Charlotte?" I think the amount of leeway I get to getting us there is very refreshing. That philosophy will trickle down to the employee level. We are not rigid in terms of operating structure. There’s going to be a lot of consistency in important areas — food service, check-in processes, handling guests’ information. There’s going to be a lot of standardization there to make sure that we’re operating in a responsible manner but how we take to the field for service recovery ... we want them to approach it with a lot of heart and a lot of compassion, as opposed to overstructuring the environment.

So what's specific to the Charlotte market in the upcoming Kimpton Tryon Park Hotel?

We have a social hour that’s daily from 5 to 6 p.m. We typically offer poured wines by the glass, we’ll have craft beers, we might have a fun cocktail. We will not say, "You must pour this Californian wine or this beer because it’s the least expensive." We’ll say, "OK, let’s invite Sugar Creek Brewing or Olde Mecklenburg in to collaborate with us with tastings and flights," or "Let’s find a great regional wine partner" — or, in the absence of that, let’s find a business that is female-owned, minority-owned or someone with a really compelling story.

Rather than, "Let’s do a steakhouse because it has X% of profitability," what does Charlotte want? We have found that there is opportunity for a great Italian-inspired restaurant, Angeline's, and Merchant & Trade is going to have a great, fun food menu and cocktails. We’ll look at the market and go, "What do we suspect Charlotte needs? Let’s do some research, let’s get out and talk to the community, let’s go see what’s missing."

In uptown Charlotte, there is a significant number of hotels in different stages of development. What does Kimpton have to offer that is either not here or perhaps is perceived to be lacking?

I think a top-flight culinary and cocktail program is something that the community is very excited about, and a very individualized spirit of service, where our staff is approaching you, wanting to help you on a personal level, as opposed to "This is my role; I’m going to take it so far and hand it off to the next person."

What are your key thoughts or takeaways looking at the hotel market here?

I am very excited about it. I know there are other hotels coming online. I think having a good, broad-based portfolio is important. You can’t have a "one and done" environment. Two or three large hotels is not going to drive additional jobs or help us with city-wide conventions. We actually need a good, healthy inventory of hotels here in the city.

Do you see any potential concerns in the market?

No, not yet. What’s coming online now are smaller key counts. What I’m seeing is 150-key hotels, 250-key hotels ... I believe there is the bandwidth for a convention hotel, something north of 1,000 rooms, but what’s coming to the market now, I think the city is going to be able to absorb without too much trouble.

Would you say we’re behind in supply right now?

It seems to be. That’s the feedback I’ve gotten — whether that was the Great Recession or deals penciling out in due course. These hotels coming online right now seem to be pretty highly anticipated. I think the community is very excited about it — I know we are. It’s going to be great to be part of a new crop of hospitality in the community.

Ashley Fahey
Charlotte Business Journal

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Campaign begins for convention hotel in Charlotte

A new convention center hotel with 800 to 1,000 roomsand paid for at least in part with taxpayer money looks more and more like an inevitability in uptown Charlotte.

Informal discussions among political, tourism and business executives have taken on greater urgency of late. Next week, City Council is expected to approve funding for final design and preparations that would set the table for a $110 million makeover of the Charlotte Convention Center— a project due to be finished in 2021 and one expected to increase the need for a second major hotel uptown.

Charlotte’s largest hotel is the 700-room Westin. It opened in 2003 near the convention center, built for $143 million, including $16 million in local government funding. Industry executives told CBJ that public money typically accounts for 30% or more of construction costs for convention hotels.

Assuming a price in the range of $350 million for a 1,000-room property — in line with current industry trends — taxpayers would be faced with a likely investment of $100 million or more.

The argument for subsidies goes like this: Hotels with anywhere from 600 to 1,000 rooms sacrifice some profitability as convention hubs because those properties guarantee blocks of rooms, often at lower rates, to help lure conferences, meetings and trade shows. Meeting planners want the convenience of being able to put attendees in one or two hotels, reducing possible logistical snags. And tourism executives in Charlotte and other cities crave the certainty of knowing they have enough rooms to pursue large-scale meetings and events without having to scramble to find hotel rooms.

Tom Murray, CEO at the Charlotte Regional Visitors Authority, told me Wednesday during an interview in his convention center office that a large-scale hotel like the one being discussed is unlikely to open for four or five years. But, he said, now is the time to start analyzing how a public-private partnership might be configured. Hotels and developers have expressed curiosity and interest in building a large-scale property here, but no one has made serious overtures to date, Murray told me.

Ambitious expansion and upgrades in peer cities, including Austin, Texas; Louisville, Ky.; and Indianapolis, have gotten the attention of Charlotte’s tourism sector.

“We see they’re winning this race a little bit,” Murray said.

Adding smaller hotels gives business and leisure travelers more options, but tends to shift bookings from one place to another around town rather than create additional demand, Murray and others in the industry told me. In that sense, the 500 rooms added uptown this year among the Embassy Suites, SpringHill Suites and other new properties, will not make much difference when it comes to conventions and conferences.

And, according to STR statistics, the number of sellout nights is rising across uptown hotels. That, in turn, industry executives said, limits the sales potential for the city. In 2014, there were 34 nights when uptown occupancy reached 95% or above. After dipping to 15 nights the following year, it reached 54 nights at 95% occupancy or greater in 2016. Through July of this year, there were 37 nights when 95% or more of the uptown hotel rooms were filled.

There are 5,000 hotel rooms in uptown, including the 500 opened so far this year. By early 2018, another 500 will be added, including the 216-room boutique Kimpton in Third Ward.

Though occupancy rates have dipped slightly with the additional hotels opened in recent months, tourism executives said the market remains healthy. And they pointed to consistent growth in the number of uptown residents and office buildings and tenants as factors that will sustain those increases. About 70% of hotel rooms citywide are filled, on average, a pace that remains well above occupancy that hovered in the low- to mid-60s for much of the 2000s.

Last month, at a trade group meeting, Murray looked on as Heath Dillard, the visitor authority’s director of business insights, made a presentation to local hotel executives outlining why a convention hotel is needed. The underlying message: Even if industry tax money paid by those same hotels winds up being used to help pay for a competitor to add as many as 1,000 rooms in uptown, it would be worthy because of the new events and business that would come with a new convention hotel.

Dillard’s presentation, using industry data from STR, pointed to market-wide gains in Austin, Nashville, Tenn., and Baltimore as examples. In those cases, to varying degrees, long-term trends showed gains for hotels across the board in room occupancy and an industry measure calculating revenue from each available room.

A portion of existing tourism tax money, special tax districts and other funding options are likely to be considered.

James Mitchell, a Democrat who leads the council’s economic development committee, told me Wednesday he is optimistic the city will find a way to attract and fund a new convention hotel.

“I look forward to that discussion,” he said. “We have to look at how Charlotte can remain competitive.”

Jeff Appelbaum, a Cleveland lawyer, has worked with local governments across the country on convention hotels, including a 600-room, $275 million Hilton in downtown Cleveland paid for and owned by county taxpayers. Appelbaum told me there are a number of ways to finance mega-hotels, but noted that attracting one without some form of public subsidy is exceedingly difficult.

Both of Charlotte’s mayoral candidates — Republican Kenny Smith and Democrat Vi Lyles — told CBJ on Wednesday that the upcoming investment in renovations at the convention center will create additional need for another major hotel. They both offered support, with caveats due to the lack of detail about a prospective negotiation between the city, the visitors authority and private developers.

“The question is, how do we pay for it?” Smith said. “It is hard to speculate on a deal that I’m not looking at. And then, if we put public dollars into a new hotel, how do existing hoteliers feel about helping their competition? I don’t see that going over.”

Vince Chelena, executive director of the Charlotte Area Hotel Association, the group that heard the visitors authority’s pitch, couldn’t be reached for immediate comment Wednesday. Earlier this summer, he told CBJthat a large block of rooms like those guaranteed by a convention hotel would be a draw, helping increase the overall amount of hotel business.

Others in tourism and hospitality said the industry would support a convention hotel, but only if it does more than just add room inventory.

Mohammad Jenatian, who runs the Greater Charlotte Hospitality & Tourism Alliance, said a convention hotel paid for in part by using industry tax money works only if it is large-scale enough to add meeting and conference space, too.

Lyles said she generally favors investments in tourism projects. “Anything that brings more bread and butter to our convention center, we ought to participate,” she said. “That kind of an investment makes a real difference. And it’s something we can measure.”

Similar arguments have been made in a number of other cities, where subsidies have partially or entirely helped land convention hotels. Discussions and negotiations for similar projects are underway in Broward County, Fla., Des Moines and Kansas City, among others.

Austin opened a 1,000-room JW Marriott in 2015 and, later this year, another 1,000-room property, the 37-story, $370 million Fairmont Austin, will follow. The Fairmont illustrates what Jenatian, the Charlotte trade group leader, has in mind: it will include 112,000 square feet of meeting space.

A CBRE study of Charlotte’s response to the opening of the Westin found that, despite the hotel’s 700 rooms increasing uptown inventory by 21%, occupancy kept growing in center city hotels until the recession arrived in 2008.

Nashville, like Austin, poses bigger and constant threats to Charlotte in competition for conventions, trade shows and other major events. In 2013, a new $623 million convention center opened in Nashville. Known as the Music City Center, it covers 2.1 million square feet, nearly four times the size of the 550,000-square-foot Charlotte Convention Center. According to The Tennessean, the new convention center failed to reach initial projections, raising questions about the public investment.

For rival cities in the Southeast, including Charlotte, the rise of Nashville has made it harder to recruit events, a circumstance exacerbated by the opening of a $270 million, 800-room Omni convention hotel in October 2013. Close to half the cost, $128 million, will be borne by taxpayers.

Louisville, another comparable city to Charlotte, is also upping its convention game with a two-year, $200 million overhaul of the city-owned convention center.

Erik Spanberg
Charlotte Business Journal

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