Local hospitality industry brokers familiar with the project tell GlobeSt.com the hotel could have at least 500 rooms based on the total square footage cited in the preliminary plans. At an estimated hard construction cost of $80,000 per room, the project could mean an investment of at least $40 million for Starwood, area brokers estimate.
The White Plains, NY-based developer's plans come as at least three other local developers work on completing plans for smaller hotels targeted at the more discerning traveler market, as GlobeSt.com reports elsewhere on this page.
Starwood's plans are also the first by a national hotel developer to risk investment capital in the metro area's lukewarm but improving 90,000 room hospitality market, area brokers tell GlobeSt.com. Marcus & Millichap notes that new planned construction will add only 1,000 rooms per year through 2005, compared to 2,800 rooms per year developed in the late 1990s.
The Encino, CA-based brokerage and investment company reports that although occupancy has improved to a 65% level, the average daily room rate has dipped 1.5% to $73.70 from $74.85 a year ago. However, local hoteliers aren't offering the same freebies their Orlando counterparts are throwing at their tourist-oriented clientele.
"Operators in Atlanta need not offer the discounts found in Orlando, as business travelers who make up a larger percentage of Atlanta visitors are not as sensitive to room rates as leisure travelers," says Adam P. Weber, senior market analyst in Marcus & Millichap's Phoenix office.
Hotel investment sales continue to lag, Weber says. "As a result of the weak market fundamentals, only a few properties" were reported sold in 2003, most of them small to medium economy-priced hotels or motels. "Sales activity will remain sluggish until business travel increases and occupancies rise in response," Weber says.
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