Property owners sought for hotel

John Repa, president of Hospitality and Gaming Solutions, presents research findings about the proposed downtown hotel project.

The group shepherding a downtown hotel development project will, by the end of the month, send a request for information to any property owner that has space for a 200-room hotel.

The hotel will be privately owned and operated, said Richard Griffin, the city's director of economic development.

That is the next step in a process begun several years ago by the Frederick County Chamber of Commerce, its major employers group, the Frederick Department of Economic Development, Frederick County Office of Economic Development, the Tourism Council of Frederick County and the Downtown Frederick Partnership, Griffin said.

The group formed after local industry leaders said meeting space was a "critical element" to keep and recruit new business to Frederick, Griffin said. Crossroads Consulting presented a market analysis Thursday that indicated Frederick could support a full-service hotel and 15,000 square feet of meeting space, as a 2010 study indicated.

The hotel study group plans to send out in September requests for proposals for a consultant to advise the team about sites and development teams, Griffin said. In October, they will send requests for proposals from hotel development teams that design hotels, he said.

By the end of the year, Griffin hopes to have the hotel development team in place.

"We would continue to be an advisory group," he said.

If construction starts in 2014, as Griffin hopes, the hotel could be open in 2015.

"That is our optimistic goal," Griffin said.

Within four years of opening, Crossroads estimated the hotel's annual net revenue would be $3 million. Crossroads President Susan Sieger and Griffin said the hotel is expected to operate privately, but some public participation will probably be necessary to get it started.

"It may mean we have to buy down the risk a little," Griffin said.

The incentive could come in the form of tax breaks or parking deck construction, among other options. The goal is for no government to subsidize the hotel on an ongoing basis, Griffin said.

Sieger said several national hotel brands have expressed interest in the project, and without that interest, there would be no point in going forward.

Building or discounting parking for the hotel seems the most likely public contribution, aldermen Carol Krimm and Michael O'Connor said.

The capital savings on a parking deck could shave enough off the hotel's cost to make it attractive, some said.

Rocky Mackintosh, who owns one of the sites being considered, and Michael Dickens, president of Hospitality Partners hotel management in Bethesda, said parking would be a major cost factor. Crossroads' results sounded positive, but might be a bit optimistic, Dickens said.

Crossroads predicted an average daily room rate at about $140. Dickens said $120 is now the local average at high-end hotels.

The study released this week looked at market numbers since the recession hit and found that Frederick's hotel business has held up better than most, said John Repa, a Crossroads subcontractor from Hospitality and Gaming Solutions.

The study found that in 2011, Frederick County posted the highest percentage increase in hotel room demand within the state, which translated into estimated tourism expenditures of more than $300 million.

"I don't get to say this very often," Repa said. "The dynamics in this market are great."

"This is exciting," Krimm said.

Within four years of opening, possibly as soon as 2019, the total spent directly at the hotel could be $16.5 million in 2011 dollars, the study estimated.

The hotel and related activity would support 280 jobs and $9 million in earnings and $1.9 million in state and local tax revenue, Crossroads estimated.

BY THE NUMBERS

Within four years of opening, hotel operations would generate:

  • $16.5 million in direct spending
  • $25.9 million in total output
  • 280 jobs
  • $9 million in personal earnings
  • $1.9 million in state and local taxes

Source: Crossroads study

DETAILS A successful hotel should:

- Be upscale and full-service with a national brand affiliation such as Hilton, Marriott, Westin or Hyatt.

- Have 200 rooms.

- Include 14,000 to 15,000 square feet of meeting space, with breakout meeting rooms.

- Include a 5,000- to 6,000-square-foot ballroom with room for 600 to 700 people.

- Include pre-function space.

- Include a restaurant and lounge.

- Include wireless Internet connections, a shop, indoor pool, spa, fitness center and business center.

Source: Crossroads study

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