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For Idaho, the Year of the Hotel

Reece Hrizuk and his groomsmen, Brandon Mott and Brandon Walton stages in the lobby of the Inn at 500 Capitol before heading to his wedding June 10 in Boise. Photo by Glenn Landberg.

Reece Hrizuk and his groomsmen, Brandon Mott and Brandon Walton, in the lobby of the Inn at 500 Capitol before heading to Hrizuk’s wedding June 10 in Boise. Photo by Glenn Landberg.

At least 32 hotels are under construction, recently opened or pending construction in nearly every sizable population center in Idaho.

Hotels are in the works in the Treasure Valley, in Twin Falls, Pocatello and Idaho Falls. Three are underway in three Wood River Valley communities, with another three announced in Burley. One recently opened in Lewiston, two are pending in Coeur d’Alene and, in March, one opened and another started construction in Rexburg.

Sandpoint, Moscow, Mountain Home and the McCall area are the only population or tourism centers in Idaho with no new hotel action.

sqft-july-14-2017-story-blurbThe surge of hotel construction was overdue.

“There was no new supply of hotels for a number of years,” said John Cunningham, CEO of The Grove Hotel, which will remain the largest hotel in the downtown Boise core, even with two newly opened hotels and two more under construction with blocks of The Grove. “We had the recession. But demand was increasing. It was an opportunity for developers to look at hotels again and there are still attractive interest rates.”

John Cunningham

John Cunningham

In downtown Boise, the hotel boom started in March 2015 and within five months four hotel projects were announced. A June 2015 Downtown Boise Hotel Market Study done by PKF Consulting USA, a CBRE company, identified a shortage of 580 rooms for downtown Boise.

Faced with new competition, managers of existing hotels say Boise’s economic growth will absorb the growth.

“There will be enough (business) for everybody, I think,” said Steve Rich, general manager for 12 years at the Residence Inn by Marriott Downtown Boise/University at the base of the Boise Depot. “If we really want to bring in higher business that the convention center can accommodate, we need more hotels. There might be drops in occupancy in downtown (in the short term) but I think it will be building back again in the near future. It’s all good.”

Downtown Boise will see an additional 598 rooms. And, near Boise Airport, Holiday Inn Express added 104 rooms in 2016 and Comfort Inn & Suites just started construction on a 108-room hotel.

“The Boise market is strong enough right now that it will absorb all the new hotels,” said Chuck Everett, vice president of operations at Boise-based AmeriTel Inn, which developed, owns and operates 12 hotels in Idaho, Utah, Oregon and Washington.

The new crop of hotels statewide will add nearly 3,000 rooms, which amounts to 12 percent of the existing hotel rooms in Idaho – but in terms of rooms, is still relatively small potatoes. There are four hotels in Las Vegas with more than 2,800 rooms each.

But in terms of proportionate growth, Idaho stands out, according to the 2017 U.S. Hospitality Investment Forecast by Marcus & Millichap, a national commercial real estate brokerage firm.

Marcus & Millichap determined that the number of Idaho hotel rooms underway at the end of 2016 amounted to 4.8 percent of the hotel rooms in the state. That’s the seventh highest proportional growth in the country behind New York, Washington, Texas, Oklahoma, Washington, D.C., and Colorado. The report accounted for only about one-third of Idaho’s hotel projects.

Beds in the new Holiday Inn in Nampa. Photo courtesy of Holiday Inn.

Beds in the new Holiday Inn in Nampa. Photo courtesy of Holiday Inn.

Idaho had 328 hotels with 22,809 rooms in March 2017, according to STR Inc., the Hendersonville, Tenn., data analytics firm. SRT counts all hotels and motels that have at least 10 rooms, generate revenue on a nightly basis and are open to the public, said Nick Minerd, public relations manager at STR.

Idaho’s hotels are distributed fairly evenly across the state.

STR’s northern area in Idaho has 124 properties with 7,150 rooms and includes McCall, Weiser and Challis and all points north. The south area has 127 properties with 8,536 rooms – includes Cascade, Payette, Ketchum and all points south and east minus the Boise metro. And the Boise metropolitan area has 77 properties with 7,123 rooms.

No large convention center hotel in the mix

None of the four new downtown Boise hotels comes even halfway to the 400-room hotel desired by Pat Rice, executive director of the Boise Centre, the largest convention center in Idaho.

The largest hotel under construction in Idaho is the Residence Inn by Marriott Boise Downtown City Center at Capitol Boulevard and Myrtle Street. Rice, and other city leaders, say a large hotel would position Boise better as a meeting place.

“Having a larger host hotel close to the convention center is generally preferred by meeting planners in selecting a city than having to use multiple housing options,” Rice said. “The fewer hotels needed the better, particularly from the perspective of logistics and transportation.”

David Wali describes the 400-room dilemma.

“Convention centers want 400-plus rooms,” said Wali, executive vice president at Gardner Co., which is in the early stages of building a 150-room Hilton Garden Inn in downtown Boise. “A hotel needs to book hotel rooms beyond conventions.”

Jared S. Smith, who is building the 185-room Residence Inn, doesn’t think downtown Boise needs a 400-room hotel.

“I disagree with Pat that we need a big box,” Smith said. “We have four (new) hotels all within walking distance of the convention center. I never believed you need a convention center hotel.”

But Smith’s 10-story hotel was big enough to deter Gardner from building two hotels with 300 combined rooms in its Pioneer Crossing development bounded by Myrtle, Front, 11th and 13th streets. Gardner retreated to the single 150-room Hilton Garden Inn.

“If Marriott had not broken ground, we would have built two hotels,” Wali said.

Boise’s not the only place that hasn’t been building 400-room hotels.

“How come there’s not one in Salt Lake City?” Wali said.

Salt Lake has four hotels with more than 400 rooms, but the most recently built is the 775-room Grand America Hotel that opened in 2001 before the Winter Olympics. The Utah Legislature, however, recently approved a performance-based tax credit that could lead to an 800- to 1,200-room convention center hotel starting construction in 2018, said Shawn Stinson, communications director at Visit Salt Lake, the city’s visitors and convention bureau.

 

A nationwide hotel building frenzy

Idaho is not alone in the hotel building boom.

Across the country, hotel construction will add about 140,000 rooms in 2017, an increase of 40,000 new rooms from the prior year, according to Marcus & Millichap, a national commercial real estate brokerage firm.

“I do believe that the amount of hotels in the pipeline in Idaho is comparable to other markets throughout the country,” said Chuck Everett, vice president of operations at AmeriTel Inn, a Boise-based operator of 12 hotels in Idaho, Oregon, Washington and Utah. “The availability of money, the pent-up demand of travelers, the relative stability of the economy, all lend itself to an increase in the amount of hotel construction.”

Hotel construction dried up during the recession from 2008 to 2012-13, said Jared S. Smith, principal at  Pennbridge Development, which is building the 185-room Residence Inn by Marriott in downtown Boise.

“Hotel stock becomes older and no one has built anything,” Smith said. “All of a sudden financing returns, all of a sudden the economy returns.”

Marcus & Millichap, however, foresees the booming room growth in the Pacific Northwest will temper increases in revenue per available room (RevPAR) and average daily rates.

“Since 2011, RevPAR in Oregon has advanced more than 50 percent, and gains in excess of 40 percent were posted in Idaho and Washington,” Marcus & Millichap wrote in its report. “While several recent sales provide some transparency on values in each of those states, prospective investors and lenders are likely to proceed with greater circumspection this year as the rate of performance improvement eases.”

Although Smith is building the largest Idaho hotel among the 30-plus in the works across the state, his thoughts reflect those of Marcus & Millichap.

“Frankly, we’re going to be oversupplied,” said Smith, noting that reasons for all the hotel construction in Idaho and nationwide vary from region to region. “It is all very specific to the market itself. It’s happening everywhere in the U.S. There is a massive hotel boom.”

AmeriTel Inn owns and operates seven hotels in Idaho: Hampton Inn, Hilton Garden Inn, Homewood Suites at Boise Spectrum; La Quinta Inn and Hilton Garden Inn in Twin Falls; and La Quinta Inn and Hampton Inn in Coeur d’Alene. But AmeriTel Inn has built nothing in Idaho since 2008.

“In my honest opinion, Idaho Falls is already overbuilt,” Everett said of eastern Idaho. “We don’t see a lot of upside in continuing to build in Idaho. We’re already in the markets and are competitive in the markets that we are interested in.”

 

How the Residence Inn in downtown Boise got to 185 rooms Jared S. Smith’s Residence Inn by Marriott stands above all the other 30 new hotels in the works.

The 10-story, 185-room hotel in downtown Boise is the tallest and has the most rooms of the new crop of hotels that are bringing some 2,800 additional rooms to Idaho.

Smith’s will be the eighth largest hotel in Idaho. His Residence Inn, nearing completion, stands just blocks from Idaho’s next two largest new hotels: the recently opened Hyatt Place and the Hilton Garden Inn now under construction, both with 150 rooms. Smith’s hotel is across the street in two directions from the 10-year-old Hampton Inn & Suites with 186 rooms and the 113-room Inn at 500 Capitol that opened in January.

Smith was first to announce a hotel in downtown Boise in March 2015, followed a week later by Inn at 500 Capitol.

“We did not believe four would be built,” Smith said. “We may all struggle for a couple years before we get to where we want to be.”

Smith is a Boise native who left Idaho to study at the Wharton School at the University of Pennsylvania and the Massachusetts Institute of Technology. He then worked for Starwood Capital, which owns the Westin hotel chain. Later he started his own hospitality company and bought his first two hotels in Atlanta and Colorado, properties he has since sold.

Smith returned to Boise in 2011.

“I didn’t believe we would be doing much on the hotel front in the Boise Valley,” Smith said. “When I spent more time in downtown, I thought there was a great need for a Marriott downtown. I talked to Marriott reps. I kept my eye on it for years. I kept meeting with Marriott. This really works. I got more excited. I would say I got serious about it in 2014.”

In the meantime, Smith built and now operates a Fairfield Inn & Suites in Twin Falls, a TownePlace Suites and Fairfield Inn in Orem, Utah, plus the Residence Inn opening soon in Boise, and a TownePlace Suites he plans to build in Twin Falls later in the year next to his Fairfield Inn.

“Boise needs an upscale brand, about as full-service as it comes without being full-service,” Smith said of the Residence Inn.

The 185 rooms may be the most among the new hotels, but seven existing hotels have more rooms. The Coeur d’Alene Resort is the largest hotel in Idaho at 338 rooms, and The Riverside Hotel the largest in the Treasure Valley at 304 rooms.

Many hoteliers, especially in Idaho, are now sticking to building less than 100 rooms or not much more than 100 rooms. Several, though, are building second hotels right next to their existing hotel, as Smith is doing in Twin Falls.

“Part of it is phasing,” Smith said. “You don’t want to have to build 200 rooms at one time. You’re phasing growth and offering a different guest experience (with a different brand next door).”

Marriott pushed the downtown Boise Residence Inn to more rooms. Zoning got the room count to 186, since reduced to 185 rooms.

“That was the floor area ratio we were allowed by the city,” Smith said.

Floor area ratio is the building’s combined floor area on all levels in relation to the size of the lot.

“It’s very expensive dirt,” Smith said. “You try to amortize it. Once you go to Type 1 construction, you’re all concrete. You might as well maximize it. We weren’t pushing for more than 185.”

 

The full roster of hotels under construction or recently opened:32 hotels with 2,968 rooms

Coeur d’Alene – A 112-room Fairfield Inn & Suites is expected to start construction in summer with a projected opening in March or April. Architect: Miller Stauffer Architects of Coeur d’Alene. General contractor: Vandervert Construction in Spokane

Coeur d’Alene – A 100-room Staybridge Suites is planned.

Lewiston – A 100-room Hampton Inn opened in October after starting construction in summer 2015. Architect: Jensen Fey of  Redmond, Wash. General Contractor:  A & A Development Group of  Spokane.

Ashton (Fremont County) –  A building permit has been issued for a 50-room Crown Hotel.

Idaho Falls – A 124-room SpringHill Suites by Marriott started construction in May 2016 with plans to open in mid to late summer. Architect: Lynn S. Woodbury & Associates, Woodbury Corp., of Salt Lake City. General contractor: Big-D Construction  of Salt Lake City.

Idaho Falls – 91-room Home2 Suites by Hilton opened in September 2015. Architect: Beecher Walker Architects of Holladay, Utah. General Contractor: Headwaters Construction of Victor was the general contractor.

Idaho Falls – A 63-room My Place is anticipated to start construction in the third quarter.

Rexburg –  A 59-room Motel 6 opened March 31 after construction started in April 2016. Architect and general contractor: Bigelow Properties of Ririe.

Rexburg –  A 101-room Hampton  Inn & Suites started construction March 1 with an expected April 1, 2018 opening.  Architect: Richardson Design Partnership of Salt Lake City. General Contractor:  Headwaters Construction of Victor.

Burley – A 90-room Holiday Inn Express is expected to start construction this year. The owner declined to provide more information.

Burley – An 80-room Hampton Inn started construction in mid-May as the first development in the River Bend Business Park. The opening is planned for March or April 2018. Architect: Jay Christensen of Burley. General contractor is Mettler Construction of Rupert.

Burley – A 90-room Sleep Inn is proposed. No further information is available.

Nampa – An 82-room Best Western Plus Peppertree Nampa Civic Center Inn opened April 19 after starting construction in March 2016. Architect: Wolfe Architectural Group in Spokane. General contractor:  Baker Construction & Development of Spokane.

Nampa – An 85-room Holiday Inn opened June 1 after starting construction in May 2016. Architect: Worth Group Architects & Designers in Reno. General contractor: PETRA Inc. of Meridian.

Nampa – A 96-room Home2Suites by Hilton started construction in June with expected opening in spring 2018. No details were released about architect or general contractor.

Meridian –  A building permit was issued April 6 for a 92-room Tru by Hilton hotel with expected completion in February. Architect: VanZeben Architecture of Ogden, Utah. General contractor:  Rimrock Construction of Draper, Utah.

Meridian – An 85-room My Place opened April 10 after starting construction in August 2016.

Ketchum – A 99-room Limelight Ketchum opened in December after starting construction in July 2015. Architect: CallisonRTKL of Seattle. General contractor: McAlvain Construction of Boise.

Ketchum – A 66-room Auberge Resort Sun Valley expected to start construction in late spring or early summer with an expected opening date in early 2019. Architect: Horberger+Worstell in San Francisco. General contractor: Conrad Brothers in Ketchum.

Ketchum – A 58-room Hotel Ketchum will emerge from the renovation of the former Bellemont Hotel.  Construction started in April and with an expected winter 2018 reopening. Architect: Mike Doty Associates of Ketchum. General contractor: Conrad Brothers of Ketchum.

Hailey – A 72-room Fairfield Inn & Suites by Marriott has received initial approval by the Hailey Planning and Zoning Commission. Architect: Errin Bliss of Hailey. General contractor: Conrad Brothers of Ketchum.

Bellevue – A 56-room Silver Creek Hotel started construction in September with an anticipated July 15 opening. Architect:  Jay Cone Architecture of Hailey. General contractor: Riemann Design & Construction of Hailey. The Silver Creek Hotel is a modular structure produced by Nashua Homes of Boise.

Twin Falls –  A 108-room Marriott TownPlace Suites is expected to start construction in fall with a projected fall 2018 opening. Architect: Johnson Braund Inc. of Tukwila, Wash. General Contractor has not been selected.

Twin Falls – A 64-room My Place started construction in February with an expected August opening, Architect: Richardson Design Partnership in Salt Lake City. General contractor: Allied Construction of Cheyenne, Wyo.

Pocatello – An 83-room Fairfield Inn & Suites started construction in June 2016 with an expected opening  June 23.  Architect: Ken Smith of Process Architecture in Missoula, Mont. General contractor: Maurer Construction of Missoula.

Soda Springs – A 53-room Cobblestone Inn & Suites started construction in December with an expected September or October opening.  Architect: Excel Engineering of Fond Du Lac, Wisc. General contractor: BriMark Builders of Neenah, Wisc.

Boise – A 112-room Inn at 500 Capitol opened in early January after starting construction in October 2015. Architect: CSHQA. General contractor: ESI Construction.

Boise – A 185-room Residence Inn by Marriott is expected to open in August. Construction started in September 2015.  Architect: Richardson Design Partnership of Salt Lake City. General Contractor: Big-D Construction of Salt Lake City.

Boise – A 150-room Hyatt Place opened May 24 after starting construction in January 2016. Architect: BWA Architects of Holladay, Utah. General contractor: Steed Construction of Eagle.

Boise – A 104-room Holiday Inn Express Boise Airport opened in August 2016 after starting construction in August 2015. Architect: Campbell & Associates of St. George, Utah. General Contractor: Wright Brothers Construction of Eagle.

Boise – A 150-room Hilton Garden Inn  started construction Feb. 1 with a scheduled opening spring 2018. Architect: Harris Architecture of Provo, Utah. General contractor: Headwaters Construction of Victor.

Boise– A 108-room Comfort Inn & Suites started construction May 2 with plans to open in spring 2018. Architect: BRS Architects of Boise is the architect. General contractor: Wright Brothers Construction of Eagle.

 

About Teya Vitu

Teya Vitu is an Idaho Business Review reporter, covering commercial real estate, construction, transportation and whatever else may intrigue him in the moment. Join me on Twitter at @IBR_TeyaVitu.