A 5-star winner or a 5th wheel?

Potential competitors undaunted by proposal for luxury hotel

Lodging

February 17, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Is Baltimore a five-star kind of town?

Florida real estate developer Neil Fisher, who is proposing to build an $80 million, 300-room Ritz-Carlton or other luxury hotel south of the Inner Harbor, thinks it is.

So does Mayor Kurt L. Schmoke, who says increased tourism and the growth of medical institutions such as Johns Hopkins have created a market for high-priced accommodations.

The developer of one of the five other major lodging projects proposed for downtown doesn't seem all that worried by the prospect that a five-star Ritz-Carlton might steal away business.

And the city's existing luxury hotel, the 203-room Harbor Court, isn't biting its fingernails over the prospect of Ritz-Carlton.

"Harbor Court has been known as the jewel of Baltimore hotels, with amenities and service that are unmatched," said Michael Nasuti, director of sales and marketing for the Harbor Court. "We are confident that our product would prevail, because we have 13 years of developing a loyal clientele."

Not everyone is so confident that Baltimore could sustain two luxury hotels with a combined 500 rooms, or even that a new one could get built.

"I think it would be very difficult to finance in this environment," said Rob Koger, president of Molinaro-Koger Inc., a Virginia hotel brokerage company. "Ritz-Carlton is a premier brand, but costly to construct. You would have to obtain healthy room rates to support development.

"There is a five-star customer in every market. The question is how many. Obviously, there are more in a city like New York. I do think they would have good occupancy. The question becomes at what room rate."

At the end of last year, the area's "luxury" market had an average occupancy rate of 75.1 percent and an average room rate of $136.17 per night, according to Smith Travel Research Inc., a Tennessee travel consultant.

The luxury tier, which Smith defines as the top 15 hotels based on price, maintained the highest occupancy of five categories the consultant tracks. The area's "economy" hotels had the lowest average occupancy, 62 percent.

"It stands to reason," said Chuck Ross, a Smith Travel Research vice president. "Demand for luxury rooms grew 3.2 percent in 1998, and no new rooms were added."

Ritz-Carlton would raise the bar on price. Its rooms rent for about $205 per night, said Stephanie Platt, a Ritz-Carlton Hotel Co. spokeswoman. Harbor Court expects to charge its customers an average of $202 per night this year. Its average occupancy rate was 76 percent last year. The city's average overall is about 72 percent.

"I would love to think Baltimore is a five-star town," said Michael Beatty, a vice president of H&S Properties Development Co., which, along with two Atlanta companies, is developing a $134 million Wyndham Hotel east of the Inner Harbor.

"But there's a limit to that market," Beatty said. "We want the market to grow, and to do that, we're building a high-quality product that is more affordable. Nine out of 10 hotel projects never get built, and, in the luxury market, that percentage is even higher."

The Wyndham Inner Harbor East Hotel's 750 rooms, likely to carry a four-star designation, are expected to rent for about $135 per night.

Beatty added that he doesn't think any five-star project built on the land adjacent to the Rusty Scupper restaurant -- would hurt business at the Wyndham. "It's a different product," Beatty said. "It would be no competition at all."

The Harbor Court's Nasuti said, "A Ritz would definitely complement the city. But can the city support two luxury hotels? Let's just say we're glad we're the first ones here."

Pub Date: 2/17/99

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