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New hotels crowd in

Some fear competition will cut room rates
Monday, June 13, 2005 | 12:00 a.m. CDT; updated 8:42 p.m. CDT, Monday, July 21, 2008

Three new hotels are scheduled to open in Columbia this year, bringing with them 366 new rooms, the city’s largest increase in decades.

Companies managing the new hotels are confident the market in Columbia will support the new rooms.

Leaders at the city’s Convention and Visitors Bureau, however, are voicing concerns that the 11.8 percent increase in rooms could put a strain on the Columbia market.

The three new hotels are all off U.S. 63. They include a Courtyard by Marriott near the Route AC interchange, a Hilton Garden Inn near the new Bass Pro Shop at the Vandiver Drive exit, and a Residence Inn by Marriott near Clark Lane. They join a Comfort Inn Suites that opened up by Columbia Mall earlier this year.

The 366 new rooms will be a significant addition to the 3,124 rooms the Convention and Visitors Bureau counts in Columbia.

Lorah Steiner, director of the Convention and Visitors Bureau, said the three new hotels represent the largest growth spurt in the past 20 years. She worries that the increased number of rooms could depress room rates if hotels are forced to lower prices to compete.

“Right or wrong, a lot of companies are anticipating squeezing out the older product,” Steiner said.

Steiner said she would have preferred the hotels’ openings be staggered because the rapid increase might make it difficult for older hotels to put money back into their property.

Stan Jones, director of development for InterMountain Management, the company building the Residence Inn, said he understands the bureau’s concerns. But he is not worried about the increase in rooms.

“Marriott and our company have all done our due diligence and analysis,” Jones said. “We had a whole feasibility team.”

While Columbia has seen a small increase in revenue at hotels annually, the occupancy rate has decreased in the past couple of years, Steiner said.

“It’s always nice to have new product for the visitor, if it’s concurrent with visitor growth,” she said.

Convention and Visitors Bureau figures put the city average for occupancy just below

60 percent. Hotels tend to break even around

50 percent occupancy.

“I have been watching the market for eight years; Columbia is ready for an upper-mid-scale hotel,” said Ravi Puri, president of Puri Group of Enterprises, the company managing the Hilton Garden Inn.

All three of the hotels coming in consider themselves at the upper end of service and price, something the managers say Columbia doesn’t offer.

The Hilton and Courtyard hope their restaurants will help distinguish them from the competition.

The Courtyard, scheduled to be finished in August, will have four floors, 134 rooms and 6,000 square feet of banquet space. A Bennigan’s restaurant will be attached.

Ben Kinseth, opening hotel director for Kinseth Hospitality, an Iowa-based management company, was confident in the Courtyard’s ability to outperform the competition as a “full-service” hotel designed mostly for professionals and businesspeople.

“We saw it as a good hotel market with an older supply of hotel rooms,” Kinseth said. “They’re in desperate need of a mid-sized conference center.”

Puri agrees Columbia needs a new upper-mid-scale hotel but said, “The saturation point is coming. With the influx of rooms in Columbia, we are reaching a plateau.”

[photo]

Brian Schultz works on the drywall for the interior of a Bennigan’s restaurant to be attached to the Marriott hotel being built off Grindstone Parkway.

He doesn’t think Columbia is there yet, however

“If they connected the airport with big cities like Chicago, New York, Memphis and Texas, I would build another hotel,” he said.

The Hilton Garden Inn is being built just north of Columbia. The four-story, 150-room hotel is scheduled to open at the end of November.

Like the Marriott, the Hilton will also have a restaurant: The Great American Grill.

Residence Inn by Marriott is an extended-stay hotel targeting travelers staying longer than five nights. Scheduled to open in September, the hotel will bring another 82 rooms to Columbia.

“We look for growing markets where Marriott is underrepresented,” Jones said.

Some of Marriott’s rooms will include full kitchens.

“Increased demand will help absorb the rooms,” Jones said.

Mike Ebert, owner and operator of the Regency Hotel Downtown, said that things might be tough at first but that Columbia is growing fast enough to absorb the excess rooms in a few years.

“Basically when you are increasing the supply of hotel rooms by about 10 percent; all hotels are going to feel the effect,” Ebert said.

Ebert said his hotel averages 55 percent occupancy: “We do very well on our weekends; we are not getting our fair share of the business travelers on the weekdays.”

“The next three years are going to be difficult and tough for everyone,” he said.

A portion of this report first aired Sunday during the “ABC 17 News at 10.”


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