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Sunday, 11 December 2016 15:35

Room for More? West Michigan execs call for new hotel capacity

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The Hilton Garden Inn — owned and developed by Suburban Inns Inc. — is scheduled to open in spring 2017 in Grand Rapids. The hotel stands as just one of many recent examples of new hotel rooms and brands coming to the West Michigan market. And stakeholders in the region’s tourism industry say there’s still room for more. The Hilton Garden Inn — owned and developed by Suburban Inns Inc. — is scheduled to open in spring 2017 in Grand Rapids. The hotel stands as just one of many recent examples of new hotel rooms and brands coming to the West Michigan market. And stakeholders in the region’s tourism industry say there’s still room for more. Courtesy Rendering

 

More than 12,000 amateur athletes and their traveling companions from around the Great Lakes will descend on greater Grand Rapids next summer when the region hosts the State Games of America.

While bringing that many competitors to the area from Aug. 3-6 will provide a boost to tourism, it also begs the question: Where will all those people stay when they visit?

Given that Kent County hotels offer only about 8,000 total rooms, West Michigan Sports Commission President Mike Guswiler concedes that many of the visitors will wind up staying in other West Michigan communities along the lakeshore, or even in Kalamazoo and Lansing.

“We’ll fill our (Grand Rapids) inventory,” Guswiler said. “But it’s good business and it brings an economic impact to the area.” 

Guswiler — who leads a nonprofit organization that markets the region for amateur and youth sporting events — has joined the ranks of local executives discussing the need for additional hotel rooms in the West Michigan region. 

Commercial developers, philanthropists and marketers hope to leverage the influx of corporate and leisure travelers in Grand Rapids and the broader West Michigan region to make the business case for expanding the area’s hotel inventory. 

A recent study commissioned by Grand Action, the Grand Rapids-based group consisting of various business and philanthropic leaders, identified the need to begin the planning process to expand the city’s DeVos Place Convention Center and with that, bring on additional hotel rooms. 

“Additional hotel inventory will likely help attract events to the existing (DeVos Place), and will be required to support any future expansion,” author John Kaatz of Conventions Sports & Leisure International wrote in the report.

In the study, Kaatz recommended the city issue a “near-term” Request for Qualifications to develop a new hotel with 350 to 500 rooms “attached or adjacent” to DeVos Place.

David Frey and John Canepa, co-chairs of the Grand Action group which previously helped to develop the Van Andel Arena, DeVos Place and the Grand Rapids Downtown Market, see expansion of the convention center and additional hotel inventory as the next step to growing downtown Grand Rapids. 

“What this study really recognizes is that it all starts with visitors,” Frey said. “If we build a place where people want to visit, we’ll build a place where people want to live. If we build a place where people want to live, we’ll build a place where people want to work and if we build a place where people want to work, we’ll build a place where business has to be.” 

In addition to recommending expanded convention and hotel facilities, the report suggested enhanced transportation around downtown, leveraging the Grand River for leisure purposes and attracting more professional sports, specifically, a minor league professional soccer team. 

WHERE TO BUILD? 

Given that events like the State Games and other conventions often tax the region’s lodging supply, local executives and developers say it could make sense to add more hotel capacity, but they lack consensus on where to add rooms and how many to build. 

One site that’s been mentioned for a possible hotel is along 10 Mile Road west of Rockford, near the popular Art Van Sports Complex, Guswiler said, adding that the seasonality of the facility presents some unique challenges for developers.

“I believe the consistent concern that arises is the ability for any hotel developer to achieve the desired occupancy levels needed in the off-season of travel baseball and softball,” Guswiler said.

Indeed, hotel development in the West Michigan region has come in fits and starts in recent years. The last several months have seen the opening of a Drury Inn at 28th Street SE and I-96, a Hampton Inn & Suites near the intersection of Michigan Street and College Avenue along the Medical Mile, and an extended-stay Homewood Suites in downtown Grand Rapids’ recently renovated Waters Building.

However, other proposals have been slower to materialize. In 2014, Grand Rapids-based CWD Real Estate Investment Inc. announced a $20 million five-story mixed-use project with a hotel component on a surface parking lot adjacent to its property at 50 Monroe Ave. NW in the city’s downtown core business district.

CWD Managing Partner Sam Cummings said in an email to MiBiz that the organization continues to work on the proposed hotel project but declined to offer any further details.

ADDING CAPACITY

Likewise, Suburban Inns Inc., a Holland-based owner and developer of hotel properties around the state, a decade ago proposed an approximately 250-room Embassy Suites by Hilton in the Monroe North neighborhood north of downtown Grand Rapids. 

COO Peter Beukema said Suburban Inns is still working through a handful of issues with the city but hopes to break ground on the long-delayed project in the spring of 2017. 

Downtown planning sources told MiBiz that while they would welcome a hotel in the Monroe North neighborhood, it wouldn’t necessarily alleviate the demand from convention visitors as they often strive to be within closer proximity to the city’s core business district. 

Beukema added that downtown or near-downtown hotel development presents a number of barriers to entry in terms of parking and the cost of construction. 

While Suburban Inns still continues to push forward with its Embassy Suites project, it also has other hotel developments in the pipeline, namely West Michigan’s first Hilton Garden Inn, which it hopes to open in spring 2017 on the East Beltline just north of Woodland Mall in Grand Rapids. 

The 144-room hotel will have an adjacent restaurant and will feature the most current design standards recommended by the Hilton corporate organization. 

While Beukema is confident that further demand for hotel inventory exists, determining just where and how many rooms to build continues to be a challenge. 

“It’s truly an exit-by-exit conversation or a community-by-community conversation,” Beukema said. “All the hotels are performing well in this market, but there’s not a lot of brands left to entertain. I think there’s probably some more opportunity as you look at the U.S. 131 corridor on the south side of Grand Rapids.” 

To that end, Grand Rapids-based general contractor Rockford Construction Co. Inc. recently completed work on the 126-room, extended stay Woodspring Suites in Wyoming near 44th Street SW and U.S. 131.

All told, Suburban Inns has nearly 700 rooms in its portfolio, spread between Grand Rapids, Holland and Midland. Beukema said the company hopes to add a new property every 18 months, bringing it to about 1,200 rooms by 2020.

FINDING GROWTH

In recent years, the region’s existing hotels have been riding a wave of positive momentum. 

That’s expected to continue as the Grand Rapids metropolitan area is poised to close out 2016 with its seventh consecutive year of record performance as measured by room revenues, according to Doug Small, president and CEO of Experience Grand Rapids, the area’s convention and visitors bureau.

According to data from Experience Grand Rapids, hotel revenues around Grand Rapids have grown about 10 percent each year since 2011, peaking at 13.4 percent in 2015. As hotels increased rates as a result, this has created some concern as it could make travelers more willing to stay in other competitive cities like Milwaukee and Cincinnati, Small said. 

“As those rates have gone up, there’s concern that we’ll price ourselves out of our competitive set,” Small said, adding that he thinks those concerns are unfounded because the market has been undervalued for a number of years. 

“We offered quality combinations equal to those in the bigger cities that we compete with at a much lower rate,” Small said. “As rates have grown at a steady and, quite honestly, fast pace, we’ve remained competitive with those in our peer set.”

The growth of hotel occupancy and revenues is driven by a few particular factors, according to Small, who cited corporate business travel, conventions and “beer tourism.”

“We’re out there pounding that message and we’re starting to see some good results,” Small said. 

The West Michigan Sports Commission’s Guswiler notes that monikers like “Beer City” go a long way in helping fill hotel rooms, adding that those designations can make visitors more willing to pay higher prices. 

“We always realized in 2007 up through the recession that we were below where we should have been,” Guswiler said, adding that the average room rate in the area stands at $114 per night. “Groups are willing to pay that if you put on a great experience.” 

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Nick Manes

Staff writer

nmanes@mibiz.com

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