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Fewer hotel bookings pose challenge in downtown Phoenix

Downtown Phoenix Wyndham Hotel (soon to be Marriott)

[Source: Jahna Berry, Arizona Republic] — The ongoing travel recession and, to some extent, city-built Sheraton in downtown Phoenix are putting pressure on central Phoenix hotels, some hotel owners say.  Tourists are traveling less and spending less, dampening the travel boom that hotel owners hoped would follow last year’s completion of the Phoenix Convention Center’s $600 million expansion.  Properties are responding in a variety of ways:

  • Last week, the Wyndham Phoenix Hotel asked for and received a 20-year tax discount from Phoenix that will save the hotel at 50 E. Adams St. $400,000 annually.  The deal will finish the hotel’s renovation and switch to the Marriott flag from Wyndham, which, the majority owner says, will drum up business.
  • The Lexington Hotel Central Phoenix, 1100 N. Central Ave., is open but is seeking Chapter 11 bankruptcy reorganization, court records show.
  • The Clarendon Hotel is starting a new promotion geared toward business travelers that will give hotel guests $20 cash for each night they stay there.

In the 14 months that it has been open, the 1,000-rooom Sheraton also has changed the market.  Phoenix built the hotel to accommodate larger conventions that were expected to meet there.  Although several groups, including the National Rifle Association, brought tens of thousands of new tourists to Phoenix, those bookings have tapered off.

Nationally, “distressed hotels are the way of the world right now because of the debt that they are carrying and because there is no business,” said Jeff Higley, a spokesman for Smith Travel Research.  “There are hotels that are struggling to meet payroll.”

The Phoenix market has been one of the hardest-hit travel markets in the nation.  From January though November, city hotel occupancy fell 12.6 percent and the average room rate tumbled 15 percent, compared with the same period in 2008.  A key barometer slid 26 percent in the city.  Revenue available per room is the amount of money generated per room excluding extras such as food and spa visits.  Only New York’s RevPar figure dropped more in that period.  It declined 28.1 percent, according to Smith Travel.  [Note: To read the full article, visit Fewer hotel bookings pose challenge in downtown Phoenix.]

Two major downtown Phoenix developments get go-ahead from city council

[Source: Lynn Ducey and Jan Buchholz, Phoenix Business Journal] — Two new hotel brands now call Downtown Phoenix home, after Phoenix City Council approved separate development deals paving the way for the properties. Council members OK’d one deal One Central Park East that includes plans for a 280-room Westin hotel and corporate headquarters for Freeport-McMoRan Copper and Gold Inc., and another that rebrands the existing 520-room Wyndham hotel as a Marriott Renaissance.   “We are very happy. Christmas has come early,” said Steve Moore, president and CEO of the Greater Phoenix Convention and Visitors Bureau.  “We now will have the power of the Marriott brand in downtown Phoenix and the Westin gives our downtown Sheraton guests an opportunity to upgrade.”

Council members unanimously approved a development agreement known as a Government Property Lease Excise Tax, or GPLET, incentive program for the One Central Park East project.  The Westin hotel would be a tenant inside the newly constructed building, which also would house Freeport’s headquarters.  They also voted 6-2 in favor of a development deal with Phoenix Hotel Ventures LLC, which would result in the rebranding of the Wyndham into a Marriott Renaissance.  Vice Mayor Tom Simplot and Councilman Michael Nowakowski voted against the proposal.

Simplot said the difference for him was that the Westin project was a modification of an existing GPLET that led to the construction of One Central Park East, which is built out, yet unoccupied.  In contrast, the Wyndham is an existing property.   “Councilman Nowakowski and I agree philosophically.  Personally, I believe GPLETS should be used sparingly for projects that simply aren’t viable without them,” Simplot said after the meeting Wednesday.

Council members voted unanimously in favor of the One Central Park East Project.  Proponents said the projects would create and retain additional jobs, create a future revenue stream for bed and sales taxes across the city, county and state levels and keep Phoenix on a competitive par for group meeting and bookings at the Phoenix Convention Center with similar-sized cities, such as Denver and San Diego.

In addition, the Wyndham project will result in $10 million in property upgrades and access to Marriott’s branding power while the Westin is an upscale business class hotel.  The Wyndham rebranding is expected to take place within the first part of next year. Construction of the Westin build-out is expected to begin shortly, with the first guests expected to begin checking into the property in 2011. [Note: To read the full article, visit Two major downtown Phoenix developments get go-ahead from city council.]