A new European-style hotel opens it doors. How will it impact downtown Chapel Hill?

AC Hotel opens in Chapel Hill

Jade Young of OTO Development speaks about the new AC Hotel in Chapel Hill.
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Jade Young of OTO Development speaks about the new AC Hotel in Chapel Hill.

What was once a Mexican restaurant is now a luxury hotel.

The AC Hotel – a sleek, modern offering from the hotel giant Marriott – is now fully operating at the corner of Church and Rosemary streets in Chapel Hill.

It’s part of the large-scale transformation the Franklin Street corridor has seen in recent years, and it is giving business travelers and tourists another high-end option for lodging.

But beyond providing a new place for tourists to stay overnight, Chapel Hill officials hope it will help boost retail in the town’s central business district – an area that is often dependent on the foot-traffic of students and university employees.

“There is demand for additional hotel rooms in downtown for visitors who want the downtown experience,” said Aaron Nelson, the president of the Chapel Hill-Carrboro Chamber of Commerce. “I am sure that the hotels will help drive business toward retailers.”

The four-story, 123-room hotel is part of a brand of hotels that was created by the Spanish hotelier Antonio Catalan in 1998. The brand was purchased by Marriott in 2011 and has opened 75 hotels across the U.S. since, including ones in Asheville, Charlotte and Raleigh.

AC HOTEL CHAPEL HILL_An oasis of modern design, with essential amenities and
An example of the minimalist rooms inside of the AC Hotel. The 123-room hotel celebrated its grand opening this week. Dylan Cross/Dragonfly Image Partners Courtesy of OTO Development

“It’s a Marriott brand, but it is a little bit different than a lot of the stereotypical Marriott brands,” said Jade Young, director of sales at OTO Development, the Spartanburg, S.C.-based company that manages and owns the hotel.

“AC is a European-style brand, so a lot of things that we have in the hotel have a more European feel.”

That European feel ranges from the breakfast bar to the minimalist rooms that strip away all non-essential functions. The hotel said its research shows that people don’t use drawers in rooms, so dressers have been removed to create more room.

The AC was also built using a new construction technique, in which the rooms were installed as prefabricated modules.

A Pennsylvania company manufactured 123 guestroom modules and trucked them to Chapel Hill, where crews are building the four-story Marriott-brand AC Hotel on West Rosemary Street for its September grand opening.

The hotel will be competing with other centrally-located hotels such as the Carolina Inn, The Franklin and the Hampton Inn & Suites in Carrboro.

The average daily rate for hotels in Orange County was $126.13 per night, according to the Chapel Hill/Orange County Visitors Bureau.

A room at the AC is likely to run you somewhere between $150 to $200 a night depending on the time of the year. That rate is similar to what other centrally-located hotels, such as The Franklin and the Carolina Inn, charge.

AC HOTEL CHAPEL HILL_The AC Kitchen serves up a European-inspired breakfast.
The breakfast bar inside the new AC Hotel in Chapel Hill. The breakfast bar serves a European-style breakfast. Dylan Cross/Dragonfly Image Partners Courtesy of OTO Development

There are now 1,390 hotel rooms in Chapel Hill and 142 in Carrboro, according to the Chapel Hill/Orange County Visitors Bureau. Chapel Hill has 79 percent of Orange County’s 1,760 hotel rooms.

What effect the introduction of the AC will have on the Chapel Hill hotel market remains to be seen, but it could take away from hotels further from Franklin Street, said Laurie Paolicelli, executive director of the Chapel Hill/Orange County Visitors Bureau.

“With AC Marriott in Chapel Hill and Carrboro’s epicenter, it’s possible that the new supply will cannibalize some of the hotel room business outside the downtown core,”she said, “because travelers will opt to stay close to the university, shopping, restaurants and other amenities.”

No exact figures are available for the number of visitors that Chapel Hill has hosted in the past few years, but the amount of money spent by visitors grew by a healthy amount in 2016, the most recent year available.

Domestic visitors to and within Orange County spent $192.63 million in 2016 – a 4.4 percent increase from the year before 2015. Additionally, Chapel Hill residents brought in $1.7 million last year by renting out their homes through Airbnb. That growth is expected to continue in the coming years, the visitors burea said.

“The spillover into retail could be significant based on our knowledge that hotel guests want to dine and shop,” Paolicelli said, adding that more hotels will put pressure on her organization to find new types of visitors.

“New growth in hotel rooms puts pressure on the visitors bureau to find new markets for our growing hospitality industry,” she said. “Currently our marketing plan focuses on leisure travel as well as medical meetings, sporting events and wedding and fraternal reunions, to name a few market segments.”

Meg McGurk, executive director at the Chapel Hill Downtown Partnership, said that because so many retailers are located in a walkable distance from the AC, she hopes that hotel guests will boost nearby retailers, especially those at 140 West and Carolina Square.

140 West has seen a number of its original tenants close since it opened several years ago, including Old Chicago Pizza & Taproom.

“140 West was almost an island on it's own for its first few years, which may be one of the reasons it initially struggled with retaining commercial tenants,” McGurk said. “Carolina Square and the AC Hotel are now bolstering that mid-section of downtown really linking the linear downtown we have.”

She added that the area has already seen an increase in foot traffic.

“We're seeing much more foot traffic in this area with the three developments,” she said. “And coming soon to 140 West is a new restaurant Hops Burger Bar out of Greensboro that has a very dedicated customer base.”

For its part, the AC is actively purchasing products from local companies, including liquors from TOPO Distillery, beer from Carolina Brewery and Hillsborough’s Mystery Brewing and artwork from Kalisher.

Zachery Eanes: 919-419-6684, @zeanes