Real Estate & Construction  October 27, 2006

New conference hotels ready to make more room

With plans for an Embassy Suites hotel at The Ranch in place, high-level discussions about a downtown Fort Collins hotel continuing and talk of additional properties as well as construction and renovation efforts under way around the region, hotel development in Northern Colorado has momentum.

Average room rates for Fort Collins hotels declined slightly in August compared with those of a few months earlier, while occupancy rates rose, according to the Colorado Hotel and Lodging Association’s Rocky Mountain Lodging Report.

Average room rates of $90.33 per room in August were down from $93.62 per room in the May report. Fort Collins occupancy rates were 70.4 percent in August compared with 63.2 percent in May. Both figures are up compared with a 59.1 percent occupancy rate in May 2005.

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The industry association does not track lodging statistics in Greeley or Loveland.

Hotel developers eye those and other statistics to gain a picture of the marketplace, said Ilene Kamsler, president of the Colorado Hotel and Lodging Association. Occupancy percentage rates and average daily room rates are important.

“Then, if they can find it, developers look for revenue per available room,” Kamsler said. That propriety information seems to be a more meaningful indicator of success to hotel developers these days than average daily room rate, she said.

“They look at the business patterns and what else is being developed in a community,” Kamsler said. “Are there industries moving in? Is there a tourist attraction that’s coming in? Has the community developed a tourism marketing plan that would indicate a need for more hotel development?”

The mix of lodging types and the current rate structure in a community will also be factored into development decisions, Kamsler said.

Hammons plans on again

The off-again, on-again plans for a hotel at The Ranch remain on, said Jay Hardy, director of the Larimer County Fairgrounds and Events Complex. Hotel developer John Q. Hammons and the Larimer County Commissioners have reworked their lease agreement on a 19.9-acre parcel of county-owned land at the fairgrounds, along Interstate 25, northeast of Crossroads Boulevard.

The agreement allows Hammons to build a 263-suite Embassy Suites hotel and conference center. The eight-story project will include approximately 37,000-square-feet of meeting and convention space, Hardy said.

Hardy looks for the developer to break ground on the project no earlier than May and more likely in mid-summer of 2007. “It’s all still out to the jury in terms of the process getting through the city,” Hardy said.

Construction – with a current price tag of $60 million to $62 million – is expected to take 18 to 20 months, depending on the weather.

The county has long seen a hotel and convention center at the site as an additional sales tool, Hardy said. “We can’t identify that we’ve lost business, but we have seen many, many promoters and show organizers come in and ask how close are the hotels. Really, it’s a natural for us to have it there and it’s also going to be a good revenue stream for Larimer County Fairgrounds projects.”

The county and Hammons have agreed to a 55-year ground lease on the project.

The neighborhood around The Ranch could one day see a cluster of hotel properties, with a Comfort Inn and Suites under discussion on the south side of Crossroads Boulevard and two limited-service hotels in the master plan for the Eagle Crossing business park. The Water Valley Land Co., which has a project occupying 183 acres at the northeast corner of I-25 and Crossroads Boulevard, is touting the location as a mix of retail, corporate and hospitality development.

Hardy says the possibility of having neighbors also in the lodging business is certain to have an effect. “In some ways it will have a good effect,” he said. “For me, it’s more about having facilities to get conventions to this region that I’m most interested in.”

Hardy sees the possibility of a downtown Fort Collins hotel as largely positive, too. “I spent seven years in downtown,” he said referring to his tenure as executive director of the Fort Collins Downtown Development Authority. “Downtown is certainly a great place for (a hotel). It deserves one. It needs one.”

Having both properties could have a net effect on convention sales, he said. “As the market grows it will probably take another year or two or three to grow into both properties.” At the same time, Hardy said the two hotels will likely have different users, with different interests and location needs.

Rooms needed downtown

The importance of a full-service hotel in downtown Fort Collins is simple, says Chip Steiner, executive director of Fort Collins Downtown Development Authority. “We don’t have one.”

With plans for a comprehensive cultural program that could attract as many as 7,000 people a week to downtown year around, the need for lodging is also simple.

“We’ll need some hotel rooms for them,” Steiner said.

The cultural project – with the working title Beet Street – is modeled after the program at the Chautauqua Institution in New York, Steiner said. Each week’s activities are planned around a theme selected from a wide range of topics; some of the themes covered this year included the media and ethics, security and preparedness, and healthy aging; the program always features musical performances and recreational activities as well. Since its inception in 1874, Chautauqua has become a vacation destination for thousands of people each summer, “and that’s what we’re anticipating here,” according to Steiner.

As an example, he pointed to Mikail Gorbachev’s visit to Fort Collins as part of Colorado State University’s Monfort Lecture Series in 2005.

“Had we been up and running, we could have planned a week-long program around that,” Steiner said, ticking off possible events including a symphony performance of works by Tchaikovsky, theater groups producing Russian plays, daily lectures and interactive meetings.

The downtown Fort Collins hotel now has a developer: Corporex Cos., based in Cincinnati, was selected by the DDA in August. Corporex, with an office in Denver, has built or managed more than 20 hotels nationwide, many of them under the Hilton or Marriott brands.

“We’re putting together the contract for exclusive negotiation rights and then we’ll start,” Steiner said.

In August, he expected to have concepts for the hotel within six month, but Steiner said he had no specifics at this point about number of rooms or size of meeting space.

“We just have no idea yet. We’ll have to do a market feasibility study and cost analysis and all of that will determine the number of rooms and the amount of meeting space we’ll have,” he said.

The surface parking lot at Remington and Oak streets downtown has been discussed as the most likely hotel location.

With plans for an Embassy Suites hotel at The Ranch in place, high-level discussions about a downtown Fort Collins hotel continuing and talk of additional properties as well as construction and renovation efforts under way around the region, hotel development in Northern Colorado has momentum.

Average room rates for Fort Collins hotels declined slightly in August compared with those of a few months earlier, while occupancy rates rose, according to the Colorado Hotel and Lodging Association’s Rocky Mountain Lodging Report.

Average room rates of $90.33 per room in August were down from $93.62 per room in the May report. Fort Collins…

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