Downtown hotel boom fuels hope, concern
LOUISVILLE, Ky. (WDRB) -- Developer Steve Poe's proposed Aloft hotel at First and Main streets is the latest in a slate of hotel news for downtown Louisville.
A 162-room Hilton Garden Inn is under construction at Fourth and Chestnut streets and scheduled to open next October. Further north, at Fourth and Muhammad Ali, a 270-room Embassy Suites is to open in early 2015.
And the Baltimore-based Cordish Co. still plans to build a 600-room hotel at the old Louisville Water Co. block as part of a mixed-use project, even though financing details aren't known.
If all of the proposed hotels are built, about 1,200 new rooms would be added to the roughly 3,820 rooms already downtown – a jump of more than 30 percent.
Hoteliers and tourism leaders say increased demand for downtown hotels will help fill those rooms, as will the continued emergence of the region's bourbon scene – including micro-distilleries and other spirit-themed projects in Louisville.
But some hotel officials and experts warn that there's no guarantee the growth will continue, especially without a firm plan to expand the downtown convention center.
"It's a lot of rooms, isn't it?" said Mary Moseley, president of the Al J. Schneider Co., which is developing the new Embassy Suites with Eric Bachelor, a Kentucky native and Florida businessman.
Moseley said she believes downtown can handle three of the four hotel projects.
"I'm not so sure Louisville is ready for a 600-room Omni – which is what Cordish is looking at – until they renovate the convention center," she said.
The Kentucky State Fair Board hasn't taken any action on – other than to accept – a consultant's report recommending a $175 million expansion of the Kentucky International Convention Center in an effort to attract new business, said Amanda Storment, a board spokeswoman.
Storment said it's premature to discuss the expansion plans "because nobody's talked about funding."
Demand for Louisville's downtown hotels has increased in recent years, according to STR, a lodging-industry research firm. In fact, 2012 saw the highest overall occupancy rate since before the economic downturn that hit around 2008.
More than 62 percent of downtown rooms were filled last year – the first time it was above 60 percent since 2007, according to STR. During the peak month of June, more than 75 percent of all rooms were occupied.
And 66 percent of all downtown rooms were booked through September, placing 2013 on pace to be the best year since before 2007, the data shows.
"When a city hits 70 percent it's time for growth," said Jim Wood, president of the Greater Louisville Convention and Visitors Bureau.
Wood called the downtown hotel market "extremely strong" and said adding new rooms will help attract conventions that might look elsewhere. For example, some delegates to the recent FFA convention stayed in Lexington because there weren't enough rooms in Louisville, Wood said.
Overall, there are nearly 19,300 hotel rooms within 40 miles of Louisville and 13,075 in Jefferson County, according to figures from the convention bureau.
"We get turned down a lot because we don't have enough hotel rooms to house a convention's housing needs," Wood said.
Poe, who announced his 175-room, eight-story hotel on Wednesday, said he believes Louisville can support the new rooms. He noted that with overall occupancy rates pushing 70 percent, "many, many days of the week you're running 100 percent."
But the additional hotels could cut into existing business, especially at older hotels, as long as the convention center isn't expanded and the city continues to lose office space downtown, said Jerry Morrison, a San Diego lodging consultant.
Executives with the Brown Hotel and Seelbach did not immediately return phone calls seeking comment. Moseley, whose company owns the iconic Galt House, said she doesn't expect a drop in occupancy at the city's established hotels.
"There's no question it's going to reduce the downtown occupancy and put the older players at somewhat of a disadvantage," he said. "The saving grace is probably that not all of these projects are going to be built."
A bourbon boost?
Besides conventions, tourism officials are banking on Louisville's bourbon connections to help fill the new hotel rooms.
The convention bureau doesn't yet track how many people from outside Louisville are staying here when visiting outlying distilleries, but Wood said the city is developing an image as a destination for bourbon aficionados.
While it's a fraction of those who visit the state's bourbon producers, roughly 23,000 people had made all of the stops on the Kentucky Distillers Association's bourbon trail by the end of 2011.
Less than 20 percent of those visitors were from Kentucky, according to data from the distillers' group. The average stay was 2.8 days, and 70 percent of the visitors stayed in hotels or similar lodging.
The Evan Williams Bourbon Experience, which is set to open next week on West Main Street, expects to draw 100,000 visitors a year. Other Main Street projects under development include the Angel's Envy distillery across from Louisville Slugger Field and the Michter's rye whiskey and bourbon distillery in the Fort Nelson building at Eighth Street.
Bill Weyland, who is developing the Hilton Garden Inn at Clay Commons, said he's already seen the impact of bourbon-related tourism on area hotels.
"It keeps people here for full weekends," he said. "We've gone from a place where you stay over for a few hours to where you stay over for a couple of days."
It's travelers like those staying for a few days – the so-called "transient segment" – that is contributing to the increase in hotel occupancy in Louisville, said Michael Howerton, general manager of the downtown Marriott.
Howerton, the past president of the Greater Louisville Hotel and Lodging Association, said it's only logical for supply to increase as a result of demand.
But most important to the city, he said, is a change in its image – something he believes the new hotels will help accomplish.
"The higher we raise the expectations of the market to those coming into our city, the more secure we're going to be overall," he said.
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