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Hotel projects boosting area’s room inventory, but financing still tough

EFFERVESCENT MOMENT: Don Lockhart, general manager of the Hotel Sierra, sprays champagne during a grand opening celebration March 31, 2011, at the uptown Charlotte hotel, which features 163 rooms. Photo by Nell Redmond

After a sluggish couple of years, the Charlotte-area hotel sector is starting to show signs of life.

New projects are either in the works or have been completed recently, such as a 125-room Hampton Inn and Suites in Huntersville that opened March 22.

There’s Hotel Sierra, a 16-floor, 163-room luxury hotel that opened last month in uptown.

There’s The Park, a 22-story development that will include the 172-room Hyatt Place Hotel, 67 residential units, a rooftop restaurant and 2,600 square feet of ground-floor retail. Construction began last month and is expected to be finished in time for the Democratic National Convention in September 2012.

Then last week, Spartanburg, S.C.-based hotel-management company HVM said it will relocate its headquarters to Ballantyne.

Despite that activity, officials say the recession hasn’t fully released the area’s hotel industry from its grip, as some projects continue to struggle to get off the ground.

Mohammad Jenatian, director of the Greater Charlotte Hospitality and Tourism Alliance, said that thanks to Charlotte winning the 2012 DNC, hotel developers from all over the world are taking a closer look at the city. That is likely to result in new hotel projects down the road, he said.

“The DNC sends a message to the world that Charlotte has arrived as a premier national convention destination,” he said. “There’s a lot of conventions we can now go after and get, where in the past we didn’t have that ability. People now know we can handle any kind of event.”

Still, while momentum in the hotel industry is starting to build, the still-tough lending environment is slowing progress, Jenatian said.

“There’s a lot of people looking at Charlotte right now, and if it weren’t for financing difficulties, you’d see a lot hotels being built,” he said. “Once lending restrictions loosen up, you will see more activity.”

Tom Kilroe hopes so. The real estate developer has been sitting on a piece of land in the town of Mooresville’s historic downtown for seven years and has run into one roadblock after another in trying to get it developed.

Kilroe said he bought the 1.25-acre lot in 2004 with plans to develop a mixed-use development featuring condominiums, offices and retail space. He figured the project would benefit from the planned Lynx commuter-rail line that was scheduled to run through Mooresville.

But when the town backed away from inclusion in commuter rail, saying it was too expensive, Kilroe’s project lost steam. His project was basically killed when plans for a private-public partnership with Mooresville to build an adjacent parking deck fell apart after the town deemed it too costly. That left the project “dead in the water,” Kilroe said, and it continued to languish though the recession.

As the economy starts to show symptoms of a rebound, Kilroe hopes to get something going at the site. But getting financing is easier said than done, he said.

“A few years ago, banks were giving subprime loans to fire hydrants,” he said. “Now, banks aren’t cooperating, especially if it’s a condo development, so we’ve suggested a hotel.”

Kilroe said he’s discussing his plans for the site with some commercial brokers. If he’s lucky, they can connect him with some joint venture partners.

“Right now it’s all about finding the right players,” he said.

Drawn to Lake Norman

Things are going smoother for Daly Seven Inc., a Danville, Va.-based company that owns and operates the Hampton Inn and Suites in Huntersville that opened in March.

The company also owns and operates a Cornelius Hampton Inn, which it bought in 2002, said Huntington Daly, regional director of sales.

Daly Seven, which was founded in 1961, owns 39 hotels in the Carolinas and Virginia, including franchised properties representing Marriott, Hilton and InterContinental Hotels.

Charlotte-based Matthews Construction Co. was the contractor for the new Huntersville hotel, Daly said. He declined to give the cost of the project.

Daly said the Lake Norman area’s mix of business and leisure travelers makes it a promising market. When it comes to number of rooms, the new Hampton Inn is the second-largest hotel in the north Mecklenburg towns of Huntersville, Cornelius and Davidson, he said.

The Lake Norman area is also proving to be a lucrative market for Vinay Patel, senior vice president of operations and sales for Sree Hotels in Charlotte.

In January, Sree completed a $350,000 lobby renovation at its 90-room Courtyard by Marriott Lake Norman in Huntersville. The renovation included a new restaurant and bar, Patel said. The updated lobby had a grand reopening March 24.

Patel said those additions make the Courtyard Huntersville’s first full-service hotel. The contractor for the project was Alpharetta, Ga.-based Monolith Hospitality.

“At Lake Norman, Sunday through Thursday is pure business travel for us, and they’re looking for new and different amenities,” Patel said. “On the weekends, it’s a lot of people who are in town for area events like fishing tournaments and soccer tournaments. It’s a really healthy market.”

Sree owns or operates more than 30 hotels in the Carolinas, Virginia and California, including 13 in the Charlotte area, three of which opened in 2009. In addition to the Courtyard by Marriott in Huntersville, the company owns Residence Inn by Marriott Lake Norman, also in Huntersville. The two hotels make up 20 percent of the hotel room inventory in Huntersville, Patel said.

Sree is also in the middle of a $6 million renovation and expansion at a Courtyard by Marriot on Little Rock Road near Charlotte/Douglas International Airport. Sree is renovating rooms and adding 58 rooms, a lobby and meeting space.

Patel said the Courtyard is about 10 years old and Sree purchased a franchise agreement for the hotel in 2008 and started construction near the end of last year. He expects the hotel to reopen in August. Cox Schepp Construction in Charlotte is the contractor.

“The hotel market appears to be coming back nicely,” Patel said. “Last year was much better than 2009, which was probably the most pitiful year we’ve had. But we’re always looking for new opportunities, whether it’s development or acquisition.”

Renovation planned for Fort Mill

Local hotelier Chad Patel, owner of Shreeji Hospitality and no relation to Vinay Patel, is also working on a renovation project.

In January, Patel bought the decades-old Plaza Hotel near Carowinds in Fort Mill, S.C., for $1.2 million and plans to invest about $1.5 million in renovations. He expects to pick a contractor in the next few weeks and start construction by the fall.

It is Patel’s fourth hotel in Charlotte. He also owns a Microtel in University City and a Quality Inn and Red Roof Inn near Charlotte/Douglas.

Plans are to renovate the hotel’s 190 rooms, two ballrooms, 7,000-square-foot restaurant and 5,000 square feet of meeting space, as well as make improvements to the building’s facade, grounds and interior.

Patel said the hotel has been neglected for years. Once it’s renovated, it will be one of the few hotels in York County with a full-service restaurant, he said.

He’s in talks with Silver Spring, Md.-based Choice Hotels International, a hospitality holding corporation, to turn the hotel into a Clarion, one of Choice’s hotel brands.

Sam Boykin can be reached at sam.boykin@mecktimes.com.

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