Durham to see influx of hotel rooms next year

May. 25, 2014 @ 09:30 PM

A flurry of new hotels is coming to Durham next year, with five new hotels targeted to open in the city and an expansion wrapping up at a sixth.

The city hasn’t seen that many hotel additions in a single year since 2004, according to Shelly Green, the CEO of the Durham Convention and Visitors Bureau.

“The only thing that’s going to fill those hotel rooms is more demand,” Green said, adding that she expects demand to rise.

The list of new hotels includes a new Home2Suites by Hilton  proposed in a development off U.S. 15-501 near its intersection with Interstate 40.

There’s also an expansion underway at the existing Rizzo Conference Center, a hotel and conference center owned by the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School. The hotel is actually located in Durham.

Additionally, four new hotels are expected to open in or near downtown in 2015. And downtown is where Green said there’s the greatest dearth of rooms.

The list includes “The Durham,” a 54-room boutique hotel targeted to open by April 2015 in the former Mutual Community Savings Bank building at 315 E. Chapel Hill St.

The developer behind the project bought the building for $2.6 million in March, according to property records, and has started preliminary construction work.

The developer has applied for a permit that would allow for the full renovation to begin.

The project is backed by $1.2 million in city and county incentives, and leaders from both governments said they were confident that the project would be completed on time to keep the incentives in place. The city and county gave the developer a one-year extension on the project, until 2015.

Another new hotel targeted to open downtown next year is the 21c Museum Hotel. Work has begun to renovate the building once known as the SunTrust Tower, Hill Building and as the CCB Building into a boutique hotel and contemporary art museum with a restaurant.

The company behind the project, Kentucky-based 21c Museum Hotels, won $7.7 million in city and county incentives for the project. Stephanie Greene, a spokeswoman for 21c, said in an email that construction is on track to allow the hotel’s opening in next year’s first quarter.

The third downtown hotel to open next year is a 134-room Aloft Hotel, under construction next to the Durham Performing Arts Center, across from the American Tobacco Campus. It’s on track to open next May, according to a spokesman.

And finally, off West Main Street near Duke University’s East Campus, an extended-stay Residence Inn by Marriott is targeted to open next year. The project incorporates a renovated portion of the McPherson Hospital, constructed in 1926.

The hospital later became part of the N.C. Eye, Ear, Nose & Throat Hospital, which was renamed the N.C. Specialty Hospital and was moved in 2005 to North Roxboro Street.

Like the 21c Museum Hotel and The Durham, the Residence Inn has to be completed next year for city and county incentives to stay in place. The city pledged more than $1.3 million for the project, and the county pledged $400,000.

Geoff Durham, president of Downtown Durham Inc., said he believes demand will exceed expectations for the new downtown hotels. That’s because of the “success and growth” of entertainment, restaurant, and retail venues downtown.

“The market was already drastically underserved, with only one downtown lodging option,” he said in an email. “So to a large extent, these new hotel developments are playing catch-up to this demand.”

Green, too, cited a need and demand for more rooms downtown. She said there’s a need in Durham for luxury hotels, and she expects the 21c Museum Hotel and The Durham to help fill that niche.

She added that additional marketing by the bureau will help fill the additional rooms. The Durham Convention and Visitors Bureau gets e a third of the occupancy taxes collected by hotels, and uses that for marketing to draw visitors.

“As the inventory of hotel rooms grows we have more marketing dollars to fuel that demand and visitation,” she said.

She added that hotel occupancy rates have recently begun to surpass the rates seen before the recession-prompted dip. In April, the occupancy rate for hotels in Durham was 76.1 percent, up from 72.4 percent in April 2008.