Saturating the market

The hotel-building binge that has seen the number of rooms in the Columbus-Phenix City market surge past 3,500 in the last two years shows no signs of slowing.

No fewer than a dozen hotels are in the construction or planning pipeline. That easily translates to more than 1,000 additional rooms on the way in a sector that already is feeling pressure on occupancy and room rates.

"I think everyone is watching the market place very carefully right now just to make sure we don't overbuild," said Peter Bowden, president and chief executive officer of the Columbus Convention & Visitors Bureau.

"There may be some nervousness of being oversaturated," he said. "I would like to think that people are building because there's confidence in the marketplace and they see either sustained growth or they are anticipating growth."

"Scary" is how Darren Phillips sees the situation. As a regional manager overseeing the Wingate Inn and Holiday Inn Express Hotel & Suites in Columbus, as well as the Quality Inn and a planned 82-room Holiday Inn Express in Phenix City, he plainly thinks too much product is materializing in a very short period of time.

"We're building, but it's only to replace the flag that we currently have," he said of the recent conversion of the Holiday Inn on U.S. Highway 280 to the Quality Inn brand. The Holiday Inn Express is being constructed next door. "Otherwise we would by no means be building. The market's getting really saturated right now in Columbus, and it is kind of scary."

The city's average occupancy rate in August was 67.3 percent, Bowden said, while the average daily room rate was $77.38.

Both numbers are considered fairly healthy given that August is typically a slower month leading up to fall, when more visitors attend local events. The numbers also are much better than the 46.6 percent occupancy rate and $63.37 room rate for Macon, a city comparable to Columbus.

But there's not much wiggle room at all when it comes to setting room rates for newer hotels, Phillips said, simply because higher rates are needed to pay for construction and ever-increasing operating costs.

And the twinkle everyone gets in their eyes when they think of the Base Realignment and Closure process funneling a combined 30,000 soldiers, civilian workers, contractors and family members to Fort Benning doesn't necessarily mean a plethora of business for hotels, Phillips said.

"Sure, it's going to play a factor, it's going to help," he said. "But when you look at 30,000 people coming, you're not looking at needing an additional 30,000 rooms."

More weekend business needed

Phillips, who now caters to a bread-and-butter customer of corporate travelers and transient military people, said more visitors are needed to fill the beds on weekends.

Glenn Davis would agree. The Columbus businessman and city councilman has a huge stake in the market, having opened a Hilton Garden Inn here two years ago. His group of partners, which includes local businessman Dhan Parekh, is in the middle of constructing arguably the most highly anticipated hotel in the market in some time.

The $15 million Homewood Suites by Hilton is being built on nearly four acres of land in the popular Columbus Park Crossing shopping, dining and entertainment complex. The 91-suite property should be completed by early March, with Davis saying unique design elements and upscale apartment-like amenities are going to make it like no other Homewood Suites in the country.

"The Garden Inn's nice because we modified it and went upscale, and we're doing the same thing here," he said. "It's going to be a showpiece. We've been told we're going to be in line for some awards, so we're excited about that . . . By far it's going to be the nicest rooms that have ever been offered in Columbus."

The heavy investment and lofty expectations give Davis pause for thought when sizing up the market. It really boils down to supply and demand, he said, and the need for more trade shows and conventions on the weekends, events that keep people sleeping, eating and shopping in Columbus three or four days.

"What we need to do is try to fill the gaps and voids that are going to be created in the occupancy," he said. "I think there is need for our community, whether it's the CVB, sports council or other organizations, to really focus on the weekend business."

Columbus now attracts an eclectic mix of tourists and visitors. They range from smaller association gatherings and family reunions to religious-oriented conventions that bring thousands of Baptists and Jehovah's Witnesses to town. Youth sports and activities, such as soccer, softball and cheerleading also are heavily in the mix.

Concern over boom

Overall, Columbus had 961,327 visitors in fiscal year 2006, the latest numbers available from the CVB. That's down slightly from 965,472 the year before.

Davis expressed "concern" that too many people are viewing the recent boom period that the hotel industry has experienced nationwide as the chance to get in on the action. Too many have plenty of disposable income but not enough understanding of the market and its current limitations, he said.

"Those are the people that kind of worry seasoned hoteliers in the industry, because it affects all of us," he said.

But keep coming and building they do.

Aside from Davis' Homewood Suites by Hilton and Phillips' Holiday Inn Express, those already in various phases of construction include TownPlace Suites by Marriott off Armour Road, Home-Towne Suites off Moon Road, Springhill Suites by Marriott on Whittlesey Boulevard, Wyndham Garden Inn off Veterans Parkway, Country Inn & Suites near Whittlesey Road and Suburban Extended Stay on Victory Drive.

Others either in the works include a Fairfield Inn & Suites on Victory Drive and a Holiday Inn Express on Benning Road in Columbus, and a Hampton Inn & Suites on U.S. Highway 280 in Phenix City.

Commercial real estate agents around Columbus say at least three or four other hotel prospects are searching for suitable dirt to build lodging on.

Even the National Infantry Foundation is searching for someone to help it build a hotel, conference center and restaurant on 40 acres of land near the National Infantry Museum being constructed on the edge of Fort Benning. The museum's targeted opening date is November 2008.

Jerry White, chairman of the foundation, said he's currently negotiating with hotel prospects. Deals need to happen soon because of the museum's construction timeline, he said.

"Those 40 acres we're going to develop into commercial enterprises to help support the operating costs of that project," White said. "Hopefully that restaurant and that conference center all will go on that site, and probably by the time we open next November we'll have a nice hotel on that site. You're probably looking at three or four quality motels within the year in south Columbus."