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Downtown Hotels

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Downtown hotels a go

Nine are planned, only three deemed ‘ready’

Premium content from Austin Business Journal by Cody Lyon, Staff writer

Date: Friday, September 30, 2011, 5:00am CDT – Last Modified: Thursday, October 27, 2011, 9:24am CDT


Commercial Real EstateTravel

Cody Lyon
Staff writer – Austin Business Journal

Developers are moving forward with plans for three major hotel projects that could transform downtown Austin’s skyline and increase the Central Business District’s hotel room stock by 30 percent — from 7,674 rooms to about 10,000.

Indiana-based White Lodging Services Corp. is on the verge of building two hotels downtown. The first will be a 17-story, 296-room, 252,000-square-foot Hyatt Place at Third and San Jacinto streets. The company is also building a 28-floor, 1,003-room, 1.2 million-square-foot Marriott hotel at Second Street and Congress Avenue.

Meanwhile, Manchester Texas Financial Group said it’s moving forward on its planned 53-story, 1,078-room hotel at Cesar Chavez and Red River streets.

The three hotels will be within walking distance of the Austin Convention Center.

All financing is in place for the Hyatt Place, and project contractor Hunt Construction Group Inc. is mobilizing on site to break ground the first week of October, White Lodging CEO Deno Yiankes said. The project is expected to take 20 months to complete, and at its peak will yield 175 construction jobs.

When it opens, Hyatt Place will employ about 90 people, Yiankes said.

The project’s architect is PVFS Architects Inc.; Fink and Roberts & Petrie Inc. of Indianapolis is the structural engineer; and Austin-based Bury + Partners Inc. is the civil engineer.

Equity financing is also lined up for the much bigger Marriott project, Yiankes said. Plans there call for multiple food and beverage venues, 374 underground parking spaces and a 4,500-square-foot fitness center. The project’s architect is HKS Architects Inc., and Bury + Partners is the civil engineer. Seattle-based Magnusson Klemencic Associates is the structural engineer. That project should be complete by the first quarter of 2015.

The hotel’s plans are still being drawn, but construction should begin in July, Yiankes said. The Marriott will create at least 600 construction jobs at its peak and, once open, will employ 750 people.

Many hotels planned, few moving forward

Over the past few years, 12 hotel projects have been announced for downtown Austin, saidMichael Knox of the city’s Economic Growth and Redevelopment Office. Several, however, are considered dead, although no formal announcements stating so have been made.

Smith Travel Research Inc. lists nine hotel projects as active in downtown Austin. If they were all built, they would add 3,219 rooms to the area. But a lack of financing has many experts counting them out of the running.

“I would be very surprised if half the rumored projects in Austin actually get built over the next three years due to on-going difficulties in the debt markets and the increased levels of required equity that many developers are simply not capable of producing or committing to,” Yiankes said.

Douglas W. Manchester, president of Manchester Texas Financial Group, said his company has ample equity lined up, and is considering a variety of financial structures to build its 1.2 million-square-foot hotel. Like the Marriott, his hotel is planning to break ground in summer 2012 and is expected to take 20 months to complete.

Manchester said it will have 750 four-star rated rooms and 250 five-star suites.

Manchester Texas Financial Group, whose parent company is San Diego-based Manchester Financial Group, has narrowed its search to two finalists for a flag operator and general contractor.

Kenneth Satterlee — president of St. Croix Capital Corp. in Austin, which also has ties to San Diego — has been hired as a development consultant. The project’s architect is Gensler, and the structural engineer is Thornton Tomasetti Inc. The mechanical and plumbing engineer is Thompson Company Inc.

Too many rooms?

For more than two years the Austin Convention and Visitors Bureau, backed by a vocal MayorLee Leffingwell, has lamented the need for more hotel rooms downtown. Huge conferences, including one put on by Dell Inc., have gone to other cities because out-of-towners can’t stay close enough to the convention center.

The Convention and Visitors Bureau estimates it has lost more than 1.6 million room-nights to other destinations because of insufficient inventory.

A recent study of downtown numbers shows tight occupancy. PKF Consulting puts the average occupancy rate for downtown hotels at about 75 percent — strong for the industry.

“Downtown Austin is unbelievable,” said Randy McCaslin, vice president and practice leader at PKF in Houston. “The Austin market is driven by corporate, leisure and government business 24 hours a day, seven days a week,” McCaslin said.

Nevertheless, McCaslin is cautious about endorsing three hotel projects — especially the two convention center hotels being built at the same time and so close to each other.

But the developers behind the three solid projects said they’ve done their homework.

“We hired Hospitality Valuation Services to conduct an independent review of the market,” Manchester said. “HVS confirmed our belief that demand already exists to support two new [1,000-plus-room] hotels,” he said.

The Convention and Visitors Bureau is excited about the prospect of re-bidding on large conferences, spokeswoman Jennifer Walker said. Right now, it’s courting events that won’t happen until well after the new hotels open.


Written by codylyonreporter

January 29, 2012 at 7:04 pm

Posted in Uncategorized

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