By DERRICK GINGERY, Greater Fort Wayne Business Weekly
derrickg@fwbusiness.com
The new Courtyard by Marriott Hotel would provide the extra rooms adjacent to the Grand Wayne Center city officials say they need to attract larger events.
But unless convention business is enough to sustain both the new hotel and the Hilton Fort Wayne, the two facilities could find themselves desperately competing for business and other travelers.
Increased hotel-room occupancy levels are anticipated once the new hotel is open and the Grand Wayne Center begins to realize its full convention capacity.
"The big question is will it be enough to go around to make it successful on an ongoing basis?" said Mark Luttik, general manager of the Hilton Fort Wayne at the Grand Wayne Center.
"Will that happen enough that it justifies having a second hotel here?" asked Luttik, who took over management of the Hilton last month.
The six-story, 250-room Courtyard by Marriott will be part of and help pay for the mixed-use Harrison Square project. The hotel will include a signature restaurant, bar, coffee shop, indoor pool, fitness center and room service during restaurant hours. It also will have about 6,000 square feet of meeting space.
Hotel revenue is part of the financing proposal for the project. The first phase is expected to cost $125 million.
City officials said developers White Lodging Services Corp. and Acquest Realty are assuming occupancy rates well above 60 percent for the new facility. And given the importance of the hotel to the rest of Harrison Square, which includes a new baseball stadium, retail and housing, large numbers of rooms cannot sit unused.
"It has to perform in our market," said Greg Leatherman, city deputy director of development.
The new hotel would have to change the hotel occupancy trend in the Fort Wayne area. Occupancy rates on an annual basis have not risen above 52 percent since 2001, and for the most part have remained between 47 and 51 percent, according to data from Smith Travel Research Inc. Those figures include hotels in and around the city.
May, the most recent month for which data were available, was the best month in 2007, with an occupancy rate of 52.9 percent.
Since 2001, there have been only four months during which the occupancy rate has exceeded 60 percent: July 2002; June and July 2005; and July 2006.
Annual occupancy rates in Indianapolis, by comparison, have been between 55 and 59 percent since 2001. Through May of this year, occupancy is at 58 percent. Since 2001, there have been 27 months with occupancy rates at 60 percent or better.
A spokeswoman for White Lodging said the company is not commenting on the Courtyard by Marriott project yet.
City officials initially said they wanted an upscale, full-service hotel to anchor Harrison Square, such as a J.W. Marriott brand, the company's top-end luxury hotel. In retrospect, that probably was not possible, said Steve Brody, who is managing the Harrison Square project for the city.
"We wanted to make this a financially viable project," said Mayor Graham Richard. "It was their judgment that this would be the best product for this market at this time."
The Courtyard by Marriott brand is not as upscale, but still will charge rates that are near the top of the Fort Wayne market.
Courtyard is considered Marriott's upper-moderate-priced brand. It has limited services and is aimed primarily at business travelers, according to research by Reuters.
White Lodging already owns a Courtyard hotel on West Washington Center Road in Fort Wayne and one in Goshen. It has built several downtown Courtyard hotels: one each in Chicago and Austin, Texas; and two in Indianapolis, near the Capitol and near the Indianapolis Convention Center. Most have the same amenities as the proposed Fort Wayne hotel.
The facility near the Indiana Convention Center is similar to the concept proposed for downtown Fort Wayne. The Courtyard Indianapolis Downtown has eight floors, 235 rooms and 5,000 square feet of meeting space. It has a 24-hour food market, restaurant, fitness center and heated outdoor pool.
The Courtyard in downtown Austin has 270 rooms and 6,600 square feet of meeting space. It has a breakfast buffet, in-room dinner delivery, a restaurant and sports bar and Starbuck's coffee shop. It also has an indoor pool and fitness center.
The Courtyard in downtown Chicago is located near the Magnificent Mile, the city's high-end shopping district on Michigan Avenue. It has 306 rooms, 3,700 square feet of meeting space, room service and a Starbuck's.
Dan O'Connell, president and CEO of the Fort Wayne-Allen County Convention & Visitors Bureau, said the affordability of the hotel will be attractive. He said it is a fit for the Fort Wayne market, but the hotel will not be the same as many Courtyard by Marriott properties, which tend to be located in suburban markets or along interstates.
"I liken this Courtyard to the one in downtown Indianapolis across from the convention center," O'Connell said. "It's not a Ritz-Carlton."
The Courtyard concept has grown more upscale over the years, Luttik said. He has concerns about how it could affect the Hilton, but wanted to research the hotel and see more renderings before commenting further.
Particularly important will be the Hilton's ability to continue attracting business travelers once the new hotel opens, expected in early summer 2009.
"No matter what, it will be a competitive environment," Luttik said. "People who need to be in the downtown area will have a viable alternative now. I'm not suggesting that it's a bad thing. It's something we need to pay close attention to moving forward."