BWI area becoming a hotel heaven Building boom raises specter of oversupply

April 19, 1997|By Cheryl Lu-Lien Tan | Cheryl Lu-Lien Tan,SUN STAFF

Suddenly, hotels are hot at Baltimore-Washington % 5/8 International Airport.

By the end of this year, seven new hotels will have opened since last fall. They will offer almost 1,000 rooms and suites, designed to accommodate business travelers who need more than just overnight lodging.

The boom around BWI is similar to expansions not so far along at Dulles International Airport in suburban Washington, where 10 new hotels are planned; and at Philadelphia International Airport, where six are in the works.

"It reflects the expectation that there will be significant executive travel and relocation in the area," said Neil M. Shpritz, executive director of BWI Business Partnership Inc., a nonprofit economic development organization. "It's obviously a sign of great confidence in our marketplace, which makes one feel awfully good."

Of the new hotels, Comfort Suites, Residence Inn by Marriott, Extended Stay America, Homewood Suites, Homestead Village and Microtel Inn are to open by the end of this year. AmeriSuites opened in October.

Room prices will range from $35 a night at Extended Stay America to $60 to $90 a night at the Residence Inn.

The last time more than one hotel opened in the area was in 1987, when the BWI Marriott Hotel and Doubletree Guest Suites began signing in guests. Experts say it's been at least 10 years since this many hotels have been built around an airport in the mid-Atlantic region.

Industry experts and competitors sound one sour note, however: Will all those new rooms flood the market?

Hotels are expanding nationwide, developers say. Robert T. Koger, president of Molinaro Koger, a Fairfax, Va., hotel brokerage firm that has dealt with properties around BWI, said hotel chains have been expanding within the past two years, especially around airports.

"The trend is that people are building where there's affordable land," Koger said. "They're building around airports because airports are now centered around a lot of economic activity -- you have companies based near airports, so you have a lot of zTC demand in these markets, which a lot of hotels feed off of."

The BWI area has experienced steady economic growth for the past four years. The annual increase in employment was 2 percent last year, and it's expected to be slightly higher this year, Shpritz said. The number of passengers also has increased, from 9 million in 1992 to 13.4 million last year -- a jump of almost 50 percent.

"We tend to look for economically robust areas [when expanding]," said Mike Wilson, Extended Stay America's vice president of marketing.

Around such areas as BWI -- where guests often stay for days or weeks at a time for business meetings, training or relocation, Wilson said -- a demand exists for suites or extended-stay rooms, which are bigger and sometimes include cooking facilities.

The average stay at Extended Stay America hotels is 10 to 14 days, he said. Of the 900 new rooms, 800 are suites or extended-stay rooms.

Some guests also prefer the features of suite and extended-stay rooms, said Steve Scharf, a development manager for Prime Hospitality Corp., which operates Ameri-Suites. Suites are often larger than regular rooms and may include a sitting room, and extended-stay facilities include kitchens.

AmeriSuites' "Taking Care of Business" suites are designed to lure corporate guests with bigger desks, executive chairs and an extra telephone line for computer hookups.

While operators of the new hotels are positive that there will be demand, some industry experts remain skeptical. The occupancy rate for BWI-area hotels was 77.8 percent last year, higher than the average nationally of 65.1 percent. But Koger said this figure will likely go down after the new hotels open.

"All new properties will create pressure on the market," Koger said. "The current growth and demand can probably support two to four new hotels in the market but they're adding more supply than can be absorbed by the market.

"A lot of companies have the mentality that, 'I'll build mine, and it'll be the other guy that doesn't make it,' where in reality, everybody ends up getting hurt a little bit," Koger said.

The added competition drove the 10-year-old Doubletree Guest Suites to spend $1.5 million last year on renovations, said Rick Staub, the hotel's general manager.

"I just think there are enough hotels in this area," he said. "It's not like we're all running at 90 percent occupancy. Every hotel that you add to the area means that everybody's getting a small piece of the pie taken away."

Rick Pastorino, president of Alexandria, Va.-based Revpar International, a hospitality consultancy company, predicts, however, that the decrease in occupancy will be temporary.

"Over the long term, one would only assume that demand will catch up with supply," Pastorino said. "As new businesses move into the area, they do tend to generate hotel demand, and BWI itself has been growing in terms of airport passenger counts, so you have a catalyst for room demand growth just from that."

In the meantime, Shpritz said he is monitoring BWI's hotel growth.

"My judgment is, there is definitely room for more hotels, but whether the magic number is six or eight or three, I don't know," he said. "I'm watching it carefully."

Pub Date: 4/19/97

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