Developers for Three New Hotels Totaling 370 Rooms in Portland, Maine Confident the Market Can Fill More Hotel Rooms
April 03, 2013–PORTLAND, Maine — Despite worries by some that Portland has enough hotels, the city’s market is not oversaturated and should have no problem absorbing the nearly 460 rooms expected to open in the next two years, according to developers behind three of the city’s current hotel projects.
The developers — Jim Brady, Tim Soley, and Vincent Veroneau — shared their thoughts on hotel expansion in the Portland market to a packed audience at the Portland Regional Chamber’s Eggs & Issues event Wednesday morning. Justin Lamontagne, a commercial real estate broker at NAI The Dunham Group in Portland, moderated the discussion at the Holiday Inn By the Bay.
The hotel projects are Soley’s 130-room Hyatt Place hotel, under construction at the corner of Fore and Union streets and expected to open in May 2014; Brady’s 109-room boutique hotel in the former Portland Press Herald building on Congress Street, which will be called The Press Hotel; and Veroneau’s 131-room Courtyard by Marriott, under construction on Commercial Street and scheduled to open in June 2014.
A fourth project, which will add 90 rooms to the downtown area, is the renovation of the Eastland Park Hotel. The hotel closed with 200 rooms and will reopen with 290 rooms in the spring of 2014 as the Westin Portland Harborview.
Some people have worried that the new hotel rooms will hurt the existing properties, but Brady, Soley and Veroneau dismissed that idea.
Veroneau, CEO of J.B. Brown & Sons, which is building the Courtyard by Marriott on Commercial Street, is often asked whether Portland already has too many hotel rooms. He points out that the last hotel his company built was in 1868 — J.B. Brown & Sons has been around since the 1840s. Not since that time have the city’s conditions been such that the company “was ready to stick our toe back into the market,” he said. “We have pretty good faith that things will be positive for J.B. Brown and the Portland community.”
All three developers said the feasibility studies they completed before pursuing their projects assumed the other two hotels would be built.
Jim Brady, the developer behind The Press Hotel, which will require the “historic rehabilitation” of the former Portland Press Herald building on Congress Street, presented industry data that showed Portland’s hotel market is growing strong.
The number of hotel rooms in downtown has nearly doubled in the past 10 years, to nearly 1,000, according to Brady. Instead of that causing revenue to fall at existing hotels, Brady said the revenue per available room — or RevPAR, a metric used by the hotel industry to determine the financial health of a hotel — in downtown Portland during that same time period has increased 50 percent.
“What that’s a sign of is that there’s pent-up demand not being met in the marketplace,” he said.
Two other hotels have been built in downtown Portland in the past three years — the 179-room Residence Inn by Marriott and the 122-room Hampton Inn — yet the average annual occupancy rates of the hotels in downtown Portland remains at 76.8 percent, he said.
Another positive sign he mentioned is that the Hampton Inn was sold last year for a reported $28 million, or about $200,000 a room, which set an all-time record for Portland, he said.
Soley’s company, East Brown Cow, is building a hotel at the corner of Fore and Union streets, kitty-corner to the existing Portland Harbor Hotel. Soley chose the Hyatt Place affiliation because it’s an as-of-yet unrepresented hotel brand in Maine, he said.
The Hyatt Place, due to open in May 2014, will be an upscale limited service hotel, including meeting areas and street-level retail space.
He said the area on Fore Street where the hotel is being built is “really ground zero for Portland’s rebirth.”
While ground has been broken on the Hyatt Place and the Courtyard by Marriot, both with starting dates in 2014, Brady said The Press Hotel will likely open in early 2015. Holding off until the beginning of the busy season reduces the risk and gives the market more time to absorb the new rooms, Brady said after the event.
Absent from the morning’s discussion was the proposed development of Thompson’s Point, which would include a hotel. That project is still in its infancy, however, and is not a sure thing, said several people familiar with the process.