New Fort Benning hotel sparks fear in competition

Benning officials say they're primarily targeting official military travelers, not civilians

tadams@ledger-enquirer.comFebruary 16, 2014 

  • WHY PRIVATIZE?

    Of the almost 17,000 hotel rooms initially operated by the Army in the continental United States, Alaska, Hawaii and Puerto Rico, more than 80 percent were in need of replacement or major renovation.
    The cost for the revitalization was close to $1 billion and the Army estimated that it would take in excess of 20 years to bring the inventory up to an adequate standard through conventional appropriation channels.
    Additionally, the internal Army plan for revitalization did not provide for adequate reinvestment in lodging facilities over time. The Army’s inability to sustain its lodging inventory reinforced the Army leadership’s position that owning, operating and maintaining lodging facilities was not a core function of the Army.
    Source: Privatized Army Lodging website

It's an 860-room hotel that is impressive in its sheer size and is situated in the heart of Fort Benning's Main Post area -- where soldiers train, work, live and play.

The 450,000-square-foot property also is part of the U.S. Army's effort to privatize its on-post lodging to replace as quickly and economically as possible rooms that are showing age through decades of wear and tear.

"I would like to stress that the purpose of this hotel is to take care of our soldiers and families," said Al Gelineau, Fort Benning's director of Family and Morale, Welfare and Recreation. "That's our target market, the official traveler. Our soldiers work hard, they train hard, they fight hard, they deserve a quality room to stay in. That is our focus."

Despite those honorable intentions, however, hotel owners and managers in the Columbus market fear the new property that is not expected to open for nearly a year. Gelineau said construction on the $80 million hotel should be completed by August, with installation of furnishings and other finishing work pushing the tentative opening out to January 2015.

The anxiety from the off-post hoteliers comes from the fact that under the Army's "Privatized Army Lodging" program, the hotel that will bear the name "Abrams Hall" also will be turned over to a large company within a year of its debut.

Real Easy, a subsidiary of Australia-based property management firm Lend Lease, will eventually take the reins of the Fort Benning hotel, then use a British hotel company, InterContinental Hotel Group, to operate the lodging for at least 50 years. Gelineau said Real Easy will have to make the Army "whole with the debt on that loan" before they begin operating the facility.

XL Holiday Inn Express

But one of the major issues the Columbus-area hotel operators have with the program is the fact that -- just as it has at 39 other Army installations across the U.S. and in Puerto Rico -- the Fort Benning hotel will take on the brand, or flag, of either Holiday Inn Express or Candlewood Suites when Real Easy steps in.

"It is very concerning," said Darren Phillips, owner of the 88-room Holiday Inn Express in the North Lake area on the city's north side. "It's one of those things where we're very glad there's going to be an upgraded facility to house the soldiers. So that part is wonderful. It's just there are other elements about it that scare us."

He cited the branding of the Fort Benning hotel, along with the fact that non-soldiers or civilians who aren't on official duty will be allowed to book reservations there. He also is concerned the on-post Holiday Inn Express or Candlewood Suites -- whichever name is adopted -- will begin advertising for non-official travelers through Google searches at some point.

John Miller, who operates the 81-room Candlewood Suites on Victory Drive, not far from the post's main gate and Benning Boulevard entrances, echoed much of Phillips' sentiments. But he also has "dire concerns" over the issue of potential lost tax revenue for the city.

"There's definitely a lot of alarm," Miller said. "In a nutshell, there's concern that if a significant amount of individuals go on base -- non-governmental employees begin staying on base in this 860-room property -- then it becomes this slippery slope of lost tax revenue. They'll buy gas on base. They will eat at restaurants on base. And we've seen in other military markets, Applebee's and other major chains move in around these hotels, and that translates to millions and millions of dollars of lost tax revenue to the city. That's at a time when they're already in distress over tax revenues."

Benning: Soldiers the primary customer

Gelineau said he doesn't know what hotel-motel tax might be charged at the Fort Benning hotel when it opens. Main Post, after all, is in Chattahoochee County. A quick check of the IHG Army Hotels reservation site found room taxes were being charged on other installations.

But Gelineau counters the notion that unofficial travelers will be a major presence at the hotel. He said the property will likely run an occupancy level of more than 90 percent with official travelers, including frequent blocks of rooms for soldiers training on post, including at nearby McGinnis-Wickam Hall (formerly Infantry Hall).

He pointed out that when the hotel project was launched in 2005, Fort Benning had a temporary lodging inventory of 1,175 rooms. That included Olson Hall, also known as "The Cuartels," which were built in the 1920s and 1930s, and are now being renovated and turned over to the installation for use as training facilities for the Officer Candidate School, the NCO Academy and other courses.

When the 860-room Abrams Hall is completed and combined with 60 rooms at Gavin Hall, post officials say, the total lodging units on Fort Benning will be 255 fewer than when the privatization program launched in 2005.

That reduction, Gelineau said, should help ensure that official military-related travelers are the primary users of the new hotel. Any rooms left over, he said, could be booked by military retirees on unofficial stays. Families of basic training soldiers also would be eligible, post spokeswoman Elsie Jackson said, although those in training would have to do the booking for their loved ones.

"It was never designed to compete with anybody off the installation," Gelineau said of the local hoteliers. "I think they're just concerned with privatization and the fact -- in my mind, misinformation -- that civilians with no connection to the Army will be staying there, and that's just not the case."

As for the new hotel being a major draw for mainstream travelers, he said it will have no restaurant, swimming pool or large meeting space. There will be some study areas and workout facilities.

New hotel centrally located

He also said there are no plans to invite restaurant chains or other civilian-oriented businesses to build new outlets near the property. There already is a Carmike Cinemas-operated movie theater across the street, along with a Huddle House restaurant. A chapel sits next door, while a post exchange retail store, a Burger King, a car wash and The Benning Club all are in the vicinity. The latter does have a swimming pool.

"That was why this particular location was selected, because a lot of our soldiers come here and they don't have vehicles. So they can walk to church, they have the movie theater, they have eateries here," said Charlotte Jackson, deputy director of Family and Morale, Welfare and Recreation. Jackson said she understands the concerns the off-post lodging businesses have, although she, too, thinks they are misplaced. She stressed the overall rules have not changed -- that the hotel will exist primarily to house official temporary duty and permanent change of station travelers.

"It's still 255 rooms short of what we require," she said. "We're still going to need rooms off post. We would still have an agreement with them for our overflow."

'Like nine hotels' in one

But even after meeting with Army officials at Fort Benning on a cold day in January and hearing them say there should be no major problems for the off-post hotels, Dhan Pareck, president of Cascade Group, and partner with Columbus Councilor Glenn Davis, said he isn't buying their reasoning on the matter. Cascade owns the 120-room Hilton Garden Inn and the 91-unit Homewood Suites in Columbus.

"This is like nine new hotels coming to Columbus," he said of the mammoth, 860-room hotel on post. "My major concern for the business community in Columbus, or the private investors, is it's going to dry up (business) completely."

Pareck, also the current chairman of the Columbus Convention and Visitors Bureau, said he's worried that room rates at the military property will be lower by design. Those on official duty receive "per diem" money for their travel, which varies by what location of the country or world they are visiting.

It's possible that the rooms on post will be rented for as little as $65 per night, he said, which means the hotel could "undercut" the off-post operators by 30 percent or more. The average daily rate now at the Cascade Group hotels is about $110 per night, he said.

Pareck said he worries the situation could put even more pressure on Columbus-area hotels, which have been seeing lower occupancy levels because of reduced Army travel due to budget cuts and a military downsizing from wars in Iraq and Afghanistan. Last week, post officials said training levels -- which are already falling -- will slide even lower in 2014 and 2015. The military said it needs fewer soldiers in a post-war environment.

"If you lose 50 to 60 percent of the business, how are you going to pay the mortgage," said Pareck, who welcomes a resolution that should make its way to Columbus Council in a couple of weeks. It will be directed to Georgia's legislative delegation on Capitol Hill.

"What we are telling them is not to brand the hotel, and unofficial (travelers) just cannot stay there, period," he said. "It should be only for the Army folks. … And that this is unfair competition to the private sector."

Local hotels under the gun

Both Pareck and Phillips at the Holiday Inn Express acknowledge there now are far too many hotel rooms in the local market. The CVB says there are about 4,800 rooms in Columbus, while there are an estimated 500 in Phenix City.

The city experienced a surge in new hotel construction following the 2005 Base Realignment and Closure process, or BRAC, which relocated the U.S. Army Armor School from Fort Knox, Ky., to Fort Benning, but still fell well short of the total growth number of soldiers, civilians and defense contractors.

It certainly didn't help matters that the U.S. entered what has been called a Great Recession in 2008, a steep economic downturn from which the nation as a whole has been slow to recover.

"Look how much has changed since the (Army lodging privatization) research was done," said Phillips, who acknowledged about 40 percent of the Columbus hotel market is military-related. "They're still going full-speed ahead with the plans established in 2005."

Columbus CVB President and Chief Executive Officer Peter Bowden said the off-post entities are still analyzing the situation and what can be done about it. He noted that during the meeting at Fort Benning last month Army officials said group business, such as military reunions, should not be a market for the new hotel. And there are plans to keep asking questions about the potential impact of the property.

Bowden said the air of uncertainty is thick in the off-post lodging community because of multiple factors.

"They're running a business and the recession is still a little heavy on us, and so business has basically been flat," he said. "They're trying to determine with the smaller Army coming, with military business being about 40 percent of the market -- all of that weighs into how we calculate profit and loss. So the hotels are concerned this may continue to erode some of their business."

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