Proposed hotels would add 500 guest rooms in Portland, but can the city absorb them?

The sign atop the Eastland Hotel glows on a misty night in this six-second time-exposure made in Deering Oaks Park in May 2012 in Portland.
Robert F. Bukaty | BDN
The sign atop the Eastland Hotel glows on a misty night in this six-second time-exposure made in Deering Oaks Park in May 2012 in Portland. Buy Photo
By Whit Richardson, BDN Staff
Posted Oct. 31, 2012, at 4:08 p.m.

PORTLAND, Maine — Developers are proposing several new hotels in Portland, betting more and more tourists will flock to the city and will need more hotel options.

Given the past summer, when occupancy rates in Portland reached nearly 100 percent, they may be right. But some worry the city will struggle to absorb the additional rooms, including managers of existing hotels in surrounding areas.

If all four hotel projects currently proposed for Portland are built, they will add nearly 500 rooms to the market.

“I don’t see how that many rooms coming in won’t affect somebody along the line,” said Jess Mooney, manager of the Best Western Merry Manor Inn on Route 1 in South Portland. “I think it will eventually hurt some of the hotels. … I’m sure we’re all a little nervous.”

Roughly 1,400 rooms are available iin the city right now, not including the Eastland Park Hotel, which is closed until 2014 for renovations and an expansion that will make it the largest hotel in the city, according to Barbara Whitten, president of the Greater Portland Convention & Visitors Bureau.

Hotels like the Merry Manor Inn usually don’t start filling up until the downtown hotels are booked up, so more downtown rooms means a longer wait before peripheral hotels benefit from the overflow, according to Greg Goforth, manager of the Fireside Inn & Suites, which is on Riverside Street in Portland, near the border with Westbrook.

Two other hotels have been built in downtown Portland in the past three years — the 179-room Residence Inn by Marriott and the 122-room Hampton Inn — but they’ve come online separately, causing “a little bit of a blip” in the market. Five hundred extra rooms entering the market around the same time will produce a bigger wave, said Goforth.

The proposed hotels are a 124-room Canal Plaza Hotel at the corner of Fore and Union streets, a 110-room hotel in the former Portland Press Herald/Maine Sunday Telegram building on Congress Street, a 131-room Courtyard by Marriott at 211 Commercial St., and the 125-room hotel included in the planned mixed-use development at Thompson’s Point. Two have announced intentions to open in 2014.

When the Eastland Park Hotel reopens in the spring of 2014 as the Westin Portland Harborview, it will add 290 rooms not available this past summer, when occupancy rates approached 100 percent and room rates downtown were between $250 and $300 a night, according to Greg Dugal, executive director of the Maine Innkeepers Association.

Some don’t think the city needs more rooms. The average annual occupancy rate in Portland previously had remained relatively consistent at between 58 percent and 60 percent for the past few decades, Whitten said.

“For the health of the existing hotels in this area, it would be preferable to have higher occupancy — in the neighborhood of 65 and 75 percent — before new hotels are built,” Whitten said, though she supports the Thompson’s Point hotel.

But not everyone agrees with Whitten’s assessment.

“I think the current rates in the summer months can have a detrimental effect on tourism,” said Vincent Veroneau, CEO of J.B. Brown & Sons, which is proposing the 131-room Courtyard by Marriott on Commercial Street. “You can stay in Boston cheaper than you can in downtown Portland during the summer months. That has the potential to erode tourism.”

Another metric hotel developers pay attention to is the average daily rate, or ADR, which is the average hotels charge for rooms. Portland’s ADR has increased from $87.88 in 2005 to $100.77 in 2011 (it only decreased in 2009). Dugal expects 2012 numbers to show an increase, as well.

“The numbers are pretty compelling,” said Tim Soley, president of East Brown Cow, which is proposing the Canal Plaza Hotel on the corner of Fore and Union streets.

Soley also thinks Portland’s occupancy rates, which include hotels on the city’s outskirts, don’t reflect the reality of what’s happening downtown. “I think the suburban market has been flat while the downtown market has grown,” he said.

While everyone agrees the additional rooms will affect the market and existing properties, no one is willing to predict who will feel the pain the most.

“There will be winners and losers, and it’s hard to say who’s going to be [who],” Dugal said. “It’s a lot more rooms. It’s a leap of faith … for the people making those investments, and certainly a concern for those that already did [invest money]. Portland as a destination is growing and growing. I just hope we can keep up with it all.”

Despite her nervousness, Mooney doesn’t think the Merry Manor Inn will be a loser. The increased competition will force all hotels to work harder to serve customers better. As an example, she said her hotel is about to begin a multimillion dollar renovation of its restaurant to give guests a dining option that doesn’t involve driving downtown.

In the end, as long as people are price-conscious, they’ll be willing to travel a few miles out of town for a better deal, she said, “which gives us a small edge.”

http://bangordailynews.com/2012/10/31/business/proposed-hotels-would-add-500-guest-rooms-in-portland-but-can-the-city-absorb-them/ printed on July 31, 2014