The Chapel Hill-Carrboro area could add as many as 520 hotel rooms to its current 1,052-room inventory in the next few years. Projects have already been approved at 300 East Main in Carrboro and at East 54 in Chapel Hill to add 290 rooms, while projects in various planning stages at Southern Village, Chapel Hill 40 and the Carolina Inn could add another 230 more.
The proposed projects at Southern Village and Chapel Hill 40 will come up before the Chapel Hill Town Council at their meeting on Monday.
Laurie Paolicelli, executive director of the Chapel Hill/Orange County Visitors Bureau, who keeps a close eye on industry trends, said it will be interesting to see how the area will deal with the expansion in rooms.
“It’s going to be a lot of hotels in a short time,†she said, “and it’s something we have to stand back and say as a community, not just as a tourism industry, ‘Can we support this?’â€
Paolicelli said there has already been a spurt of hotel growth in the area in the last five years and that it has just finished adjusting to that growth.
“If we’re looking at a hotel explosion here of 1,000 rooms to 1,500 rooms, the question is, can we rely on the university exclusively to fill these rooms? And if not, where do we look for new markets? And I think that’s one thing that we as tourism people here who read the stats every day and look at who’s staying and who’s not, fret about,†she said.
She said that some hotels will suffer at first as newer ones open. “Somebody always takes it on the chin… and then they get more competitive.â€
Nationwide, recent economic woes have hit the hotel industry hard. Soaring gas prices cut a lot of summer vacations short, and as the general economy nosedived in September things didn’t get much better for the industry.
But in spite of the bad national news, local occupancy rates from January through August were up 0.4 percent, while over the same period national rates were down 2.5 percent and state rates were down 4.5 percent.
“Orange County has always been somewhat protected from devastating economic loss, and that’s because it’s an intimate university-related higher demographic that comes here,†Paolicelli said.
Manish Atma is the principal of Atma Hotel Group, which operates eight hotels in North Carolina, including the Hampton Inn in Chapel Hill on Fordham Boulevard and two more hotels at the intersection of NC 54 and I-40. He isn’t worried about the fluctuations in the local occupancy rate.
“You’ve got such a broad segment of branded hotels, that [the data] takes all of that and gives you an average,†he said. “You might have a couple of hotels that are really doing badly, but the average comes out decent, so it’s location-driven.â€
Atma remains optimistic. “Due to cutbacks, we are down; but fundamentally the market is still doing well. The state, I feel, is doing well.â€
Paolicelli is a strong advocate for the tourism industry in Orange County and wants to see it develop further. She said that visitors spend $137 million each year here and local tourism employs around 1,800 people.
She’s optimistic that in the end the surge in guest rooms will work itself out if hotels focus on bringing in new sources of visitors and not on attacking each others’ customer bases.
“First you have a dip, and then things start leveling out.… But the most important thing we have to be careful of is the cannibalistic effect.â€
Aloft at East 54
Representatives of Starwood Hotels, the company that owns the Sheraton and W chains, say the company plans to develop one of its high-end and modern Aloft hotels at East 54 on the corner of South Hamilton and Raleigh roads. Aloft Chapel Hill will be owned by Inland American Real Estate Trust Inc. and operated by Barclay Hospitality Services. The Aloft brand is touted as “hip, contemporary environment.â€
Barclay spokesperson Craig Lambert said he thinks the style will be a good match for Chapel Hill: “The Aloft brand’s fresh perspective is changing the industry as we know it, and we are happy to be able to provide guests and locals of Chapel Hill with the latest alternative in travel.â€
The company plans to start construction in early 2009 and open in the winter of 2010. The hotel will have 140 rooms, a bar, 600 square feet of meeting space, an outdoor area and a swimming pool.
300 East Main
Atma Hotel Group will be building a 150-room hotel as part of the 300 East Main development, with rooms priced in the $125 to $150 per night range. It will have 2,500 square feet of conference facilities, which will be able to handle about 200 people. The hotel will have a limited-service restaurant if it becomes a Hilton Garden Inn; but if it becomes a Hampton Inn and Suites, it won’t.
Though the brand hasn’t been decided, the hotel has drawn criticism from some neighbors and town officials who questioned whether it is a good fit for Carrboro’s eastern gateway.
Atma said the brand of the hotel will not have a major impact on its look.
“It will be a beautiful hotel,†he said. “It will be a hotel that the people of Carrboro and also Orange County will be proud of. Even if [it’s] a Hampton Inn and Suites, the look of the building is not going to change. The only thing that is going to change is the interior of the building — how it’s laid out.â€
Paolicelli is optimistic about the new hotel. “I only see it doing great things for Carrboro and Chapel Hill,†she said.
“The impact it’s going to have on Carrboro’s local businesses is going to be incredible,†Atma said. “Because, you have to understand, everyone who’s staying in this hotel has to go somewhere to eat, and they’re going to eat in Carrboro.â€
He said that construction on the hotel should start sometime in either the second or third quarter of 2009 and should finish by the end of 2010.
Southern Village
D.R. Bryan and John Fugo want to build either an 80- to 100-room hotel or condominiums in the parking lot in front of Weaver Street Market in Southern Village. The hotel would be 86,000 square feet, with three stories of rooms and two levels of parking. The plan has met with opposition from residents of Southern Village.
Rosemary Waldorf, project manager for Bryan Properties, said that when she learned from the Visitor’s Bureau that the average visitor to Chapel Hill spends $286 per day, she was convinced that a hotel would help Southern Village.
“You take that and multiply that [by] the number of rooms and 65 percent occupancy … I was persuaded,†Waldorf said. “I think that a hotel [in Southern Village] really would help the businesses here. I think the challenge is figuring out how to get through the construction period.â€
Eric Tannery, director of new development for Summit Hospitality Group in Raleigh, said his company is interested in operating a hotel on the site. He said the thinking now is that it would probably be a Hyatt Place hotel.
Tannery said that the hotel would be a select-service hotel that would offer continental breakfast and have some meeting space. He said that if he had to give a rough estimate of the nightly rate, he would put it around $140 to $150, although rates can change with the economy.
Summit operates 14 hotels in North Carolina, including the Residence Inn by Marriott on Erwin Road in Chapel Hill.
If the project is approved, Waldorf estimated that construction could start sometime around late 2010 and would take about a year.
Chapel Hill 40
In 2007, the town’s Northern Area Task Force Report called for more mixed-use property, specifically mentioning the need for a hotel in that part of Chapel Hill. John Coley and Bryan, who now own the old VilCom Campus and have renamed it Chapel Hill 40, are interested in the possibility of putting in a hotel there in the future, which would require a change to the zoning ordinance. Their request got a favorable response from the Community Design Commission in June.
Waldorf said that interstate traffic and Carolina North would bring people to a hotel at Chapel Hill 40 as well.
“All bets are off, I think, on when anything new is going to happen in our world today. But assuming that there is some kind of economic recovery, I think a lot of people concur that that use in that location makes a lot of sense,†Waldorf said.
She said that while it was too early to say with any certainty what sort of hotel would be there, Bryan Properties’ early research suggests that they probably need around 100 rooms for the project to be economically feasible.
Waldorf said they were interested in a certain level of quality.
“Aside from saying it won’t be a Days Inn, I don’t want to name any brands, because it would be premature,†she said.
Carolina Inn
Plans for the Carolina Inn to expand are still on the table but won’t be going ahead for the next 18 months to two years, according to Mark Nelson, the hotel’s director of sales and marketing. For some time, the hotel has been planning on renovating Whitehead dormitory and converting it into approximately 30 more guest rooms, but current economic conditions are preventing it from moving forward.