Hotels on the Horizon - Developers have razed a small retail building on North Tamiami Trail to make way for a new 18-story hotel, capitalizing on a surge in Florida travel and a move to restore rooms lost over the past decade.
Jebco Ventures Inc. hopes to begin the long-awaited Embassy Suites hotel by early April, with completion slated for late 2016. The new Embassy Suites is to be the third major downtown lodging property to be built since the economy’s prolonged slump, joining a pair of Starwood-branded hotels within Sarasota’s urban core.
The three downtown hotels would bring nearly 600 new rooms to the market during the next two years.
Some industry observers, however, predict the trio of towers now advancing will satisfy the pent-up demand that has plagued the region's tourism industry — and possibly halt the handful of other hospitality projects that have been proposed for the area.
The $40 million hotel is designed to contain 180 suites, 8,000 square feet of ballroom space, a restaurant, swimming pool and a 200-car parking garage.
Family and business travelers
Developers have long attempted to bring an Embassy Suites flag to Sarasota. The mid-level Hilton brand caters to both family vacationers and business travelers. Tourism boosters say the new hotel, coupled with the two others now underway, will fill a void left by the loss of a 100-room Holiday Inn downtown, the Half Moon Beach Club on Lido Key and others. The development also comes as tourism in Florida has soared to record highs.
The Embassy Suites marks the latest in a surge of new hotel development in and around downtown, with more than half a dozen projects now proposed.
A 255-room Westin and 138-room Aloft hotel — both part of the Starwood chain — are now in various stages of construction.
- Aloft Sarasota sits at the corner of South Palm Avenue and Ringling Boulevard, part of a $31 million complex that also will include 139 upscale apartments, a restaurant, 6,000 square feet or retail and a parking garage, city records show.
- The Westin will be in one of two 18-story towers comprising the $120 million Vue Sarasota Bay project at the northwest corner of Gulfstream Avenue and Tamiami Trail. A total of 141 luxury condominiums also are planned there.
Three other developers have proposed lodging projects, as well, which would bring another 550 rooms to downtown — including to a city-owned site next to its Palm Avenue parking garage. Those are still in the planning stages. And at least two other more limited-service hotels near the University Town Center mall are pending. A 130-room Homewood Suites has already broken ground, and another on Stickney Point Road is also in the works. If they all were to reach fruition, more than 1,500 new rooms would open within about 24 months.
Upswing to plateau?
But industry analysts caution the market can't absorb that many new rooms all at once — even with high-profile sporting events like the 2017 World Rowing Championships in the offing. They predict the current tourism upswing will likely plateau, crimping the feasibility of several proposed projects.
“The ones coming out of the ground hurt the feasibility of those further down in the process,” Lesser said. “You can definitely bet that all of the hotels planned in Sarasota will not be built,” said Daniel Lesser, president and CEO of LW Hospitality Advisors, a New York firm that tracks the hotel industry.
Haley, for another, also contends that 1,500 new rooms would probably exceed Southwest Florida's demand. Yet developers behind the proposed lodging properties say they have no plans to scuttle their developments.
Those behind the 150-room Kimpton Hotel, pitched for U.S. 301 and Main Street downtown, for instance, say Sarasota still has room for more hotels.
“We're ground zero for office, government, business and legal,” said Rod Connelly, president and founder of Civix Development, which has proposed the Kimpton. “We're a little different of a project, and that gives us the confidence to move forward. The demand is still strong for multiple hotel opportunities.”
Business is very cyclical
New hotels typically are built when the average occupancy of existing lodging properties in a given market exceeds 70 percent. And, despite the recent tourism rebound, hotel occupancy in the Sarasota-Bradenton area last year averaged 69.1 percent, according to data compiled by Smith Travel Research.
During slower summer months of last year, hotel occupancy reached just 53 percent, on average. Hotels typically must maintain between 65 percent and 70 percent occupancy to be profitable. Still, tourism in the region has improved. Overall, occupancy in Southwest Florida is up 7.9 percent from 2013 and 33 percent from 2010. Average daily rates have similarly risen, by 7.1 percent over the year to reach $125.46 in 2014.
But that may not be enough to spur such ambitious new hotel development, Lesser said. “I have seen this time and time again throughout the country,” Lesser said. “The hotel business is very cyclical, and when demand grows, what you see is a rash of new hotel development that runs the spectrum — from those that are actually coming out of the ground to those that are an idea in someone's head.”
Herald Tribune 1/30/2015
