Written by Jason Sandford | Skyline Photo by Anthony Harden
Asheville’s current hotel construction boom and its implications
The national media’s infatuation with Asheville has been almost embarrassingly lavish the past few years. The accolades came showering down in shareable online lists and splayed across full-color glossy magazine centerpieces. Some were straightforward and simple: Coolest town. Best kept secret. Friendliest. The mentions piled up and so did the adjectives: Great location for honeymooners. Top beer town with a mountain biking problem. Perfect dog-friendly city.
The hype finally hit its high point when the respected Frommer’s travel guide named Asheville its top destination to visit in the summer of 2015.
It wasn’t just tourists who took notice. Hoteliers, looking to take advantage of a rebounding economy and the apparently insatiable desire of travelers to find the next hot spot, began putting Asheville on their list of top construction sites. On paper, it made sense. Tourists have sought respite in the city’s cool, green mountains since the turn of the century. More recently, with a dreary national recession firmly in the rearview mirror, visitors began setting out in droves. Some nine million arrived in Buncombe County last year, according to local tourism officials.
A relatively small number of center-city hotels were open to greet them. So hotel companies started buying key land tracts and drawing up architectural plans. Construction crews hit the ground, and a handful of towering cranes now frame the Asheville city skyline. They mark the rough outline of an unprecedented hotel building boom that will see an estimated 2,100 new hotel rooms open in Buncombe County over the next three years. It’s a 25% increase in the number of available hotel rooms; an increase that no other competing destination city is grappling with. The majority of those will open in downtown Asheville, a thrumming entertainment and business district with its eyes set, more often that not, on out-of-towners.
Inevitably, the rush to build new hotel rooms has created tensions among various factions. Hoteliers are worried that a wave of new supply will push down occupancy rates and the amount they can charge for a room. Some city residents see the visiting masses taking an ever-increasing toll on city infrastructure, while others are pushing for greater flexibility in city rules that govern how they can rent their own rooms to tourists. In the short term, downtown parking will be tight, creating its own headaches. In the long term, some are already questioning the sustainability of the swelling hotel numbers.
John McKibbon
The McKibbon Effect
How is the construction boom playing out? Just ask John McKibbon of Georgia-based McKibbon Hotel Group, Inc. No single hotel owner has been more influential, and faced more obstacles, in trying to open in downtown than McKibbon, who has at times been variously foiled, frustrated, and fruitful in seeing his vision through. McKibbon’s company, along with Florida-based McKibbon Hotel Management, Inc., owns and manages nearly 100 hotels around the United States.
The company opened the 115-room Aloft Asheville Downtown on Biltmore Avenue in 2012 after an unsuccessful attempt to develop a plot of property across town near the historic Basilica of St. Lawrence. The effects of the recession were still lingering, and the project, which included some much-needed public parking, was generally well-received (though more than a few questioned the colorful neon lighting that brightens the Aloft sign at night).
McKibbon then moved to secure what some might consider a crown jewel in downtown property. In November 2013, McKibbon purchased the BB&T building, Asheville’s tallest building and largest office complex, and an associated parking deck for $7.5 million. He announced plans to remake both locations into separate hotels. Meanwhile, other hotel companies began announcing their own plans to build around the city. Companies planted their own flags, from Hilton to Hyatt, at key locations.
McKibbon’s crews got to work demolishing the parking lot of the former BB&T building at the corner of Broadway and College. A nine-story, 132-room, Marriott-branded hotel called the AC Asheville Downtown would go in that location, McKibbon announced. The hotel, which includes a 336-space parking deck, is on track to open later this year. Once finished with that property, McKibbon said, he would move his focus just up the street to start remodeling the BB&T building itself.
But as 2015 began to unfold, some city residents began to voice concerns about all the new downtown hotel construction. Was there enough political oversight of big downtown construction projects? Would the masses of resulting tourists fatally erode city infrastructure? City politicians, some facing election, also took notice. After all, for the old skyscraper, McKibbon was proposing to redo the shell of the edifice, renovate more than 200,000-square-feet of office space, and create another 133-room hotel inside, as well as 39 condos, two new restaurants, and add office and retail space.
As 2015 began to unfold, some city residents began to voice concerns about all the new downtown hotel construction.
When final approval for the project came in January, McKibbon made sure he got his green light by agreeing to pay full-time employees a living wage ($12.50 an hour without employer-provided health insurance, or $11 an hour with insurance, which McKibbon said he already pays), contributing $250,000 to the city’s affordable housing trust fund, and spending $750,000 to improve the public infrastructure around the building. It was a remarkable deal, and one that city leaders said they hoped would be noticed by future downtown developers.
Of course, the McKibbon Hotel Group isn’t the only player contributing to the hotel building boom. Tony Fraga and his FIRC Group, with offices in both Asheville and South Florida, is building a new 92-room Country Inn & Suites in a four-story building next to the Westgate Shopping Center just west of downtown. Fraga’s company, which owns the Haywood Park Hotel on Battery Park Avenue in downtown, is also building a 136-room Cambria Suites hotel on the corner of Battery Park and Page Avenues. Hilton, Hyatt, and Holiday Inn are all in various stages of building new hotels in the city as well.
Pack Square rendering of projected hotel at BB&T building
The Strategy
As construction crews have swung into gear over the past couple of years, so too has the marketing and promotional machinery to try and keep all those new hotel rooms full. Nervous hoteliers scrambled in 2015 to secure an increase in Buncombe County’s hotel room tax, the first increase in decades. Working with the local delegation of state legislators, tourism officials secured a rate increase, from 4% to 6%.
The resulting revenue increase is significant—an additional estimated $5 million, bringing the Buncombe County Tourism Development Authority’s (TDA) budget to an estimated $13.4 million. The money, which will be used to continue to market Asheville as a top tourist destination, is already coming in after the increase went into effect in November. The total occupancy tax revenue for that month was $1.44 million, compared to $833,795 for November 2014.
The room tax wasn’t without its own controversy. Some city residents told TDA officials and city leaders that part of the new monies should be devoted specifically to city infrastructure projects, noting that increased tourism is taking its toll on streets, sidewalks, and other core services. Tourism officials have responded by pointing out that over the years, they’ve awarded a significant portion of tourism dollars to city projects through its Tourism Development Product Fund. (Last year, city projects received 25% of that fund, or $3.1 million.)
With the funding in place, tourism officials have turned their attention to strategy. They estimate that about 700 new rooms will open in Buncombe County each of the next three years. The 25% increase in hotel rooms poses “an unprecedented challenge” to tourism officials, says Stephanie Brown, executive director of the Asheville Convention and Visitors Bureau. The goal is to use an increased marketing budget to make bigger plays in existing markets, while eventually reaching out to new markets, all in an effort to keep hotel occupancy and hotel room rates at sustainable levels for hotel owners.
Asheville is becoming more and more of a “sustainable, year-round destination,” according to Brown, citing Smith Travel Research statistics from 2015 showing that Asheville’s hotel occupancy rate increased 4.9%, while its average daily room rate was up 8.1% and its revenue per available room shot up 13.4%. Also, winter occupancy rates are edging upward past the 50% mark, another key indicator that, as Brown notes, “we aren’t as seasonal as we’ve been.”
The spring advertising plan for the Asheville area, in general terms, is to increase online video views, enhance broadcast coverage, expand native advertising, and increase advertising in Atlanta, according to Ellen Kempner, a vice president at Peter Mayer Advertising, the TDA’s New Orleans-based advertising agency. Key markets from which to draw visitors include Atlanta, Charleston, Raleigh, Cincinnati, and Dayton. Next year, local tourism officials plan to air broadcast advertising for Asheville in Baltimore, Washington, D.C., and South Florida markets.
The goal of the advertising, Kempner says, is to: drive overnight visitation during slow periods, known as the “shoulder season”; convert day trips to overnight stays; extend the length of stays by one or two more days; create demand for increased lodging options; and draw visitors during midweek, rather than just weekends. In coming months, tourism officials plan to zero in on ways to increase meeting and convention business that would fill rooms on weekdays.
Another key will be targeting air travelers. Asheville is already a well-known weekend driving destination. Tourism officials now have their sights firmly set on attracting visitors who will fly to town. The Asheville Regional Airport is in the midst of a federally funded $64 million construction project that will redevelop the airport with a new runway and make other structural improvements.
It’s all aimed at continuing the tourism industry’s recent growth surge and positioning Asheville firmly in the ranks of top travel destinations around the United States and even the world.
Asheville’s target audience is adults ranging in age from 25 to 64, with median household incomes of $75,000-plus a year. The potential visitors are experienced travelers who tend to be women, more often than not, as well as frequent travelers who often visit places for food or other experiences, according to Kempner. Other “experiential visitors” include tourists who seek outdoor adventures, and those who travel to see specific musical acts. That topic—marketing Asheville as a music destination—will be an emphasis for tourism officials later this year as they roll out a new section of the ExploreAsheville.com website that spotlights local musicians.
It’s all aimed at continuing the tourism industry’s recent growth surge and positioning Asheville firmly in the ranks of top travel destinations around the United States and even the world. The city has long been a destination for visitors seeking everything from clean mountain air to a retreat from the hustle and bustle of big city life, featuring anchor attractions such as the historic Biltmore House to the Omni Grove Park Inn. The city has also seen cycles of boom and bust over the years. The latest trends clearly show a city, and a pillar industry, on the upswing, with forecasts for continued growth.
The projected completion dates and other information presented in this article are as accurate as possible at the time of publication. Please be aware they are still subject to change as construction circumstances change.
[Note: Hotel renderings and photo of John McKibbon courtesy McKibbon Hotel Management, Inc.]__________________________________________________________________________________
Boom City
Here’s a quick look at the hotel building boom in Asheville.
RECENTLY OPENED
Hyatt Place Asheville Downtown,
corner of Haywood and Montford opened in March 2016.
The Biltmore Village Inn at Biltmore Estate
opened in December 2015.
The Windsor Hotel,
a small boutique hotel, opened in an existing building on Broadway in November 2014.
*
In the several years prior to those,
The Aloft Hotel opened on Biltmore Avenue in 2012;
Hotel Indigo, on Haywood Street, 2009;
the Hilton Hotel, in Biltmore Park, 2010; and the
Grand Bohemian Hotel, in Biltmore Village, 2009.
CURRENTLY UNDER CONSTRUCTION
Estimated Opening Date (EOD)
Hilton Garden, EOD: June 2016
corner of College and Charlotte streets
AC Hotel by Marriott, EOD: 2017
corner of Broadway and College
Country Inn and Suites, EOD: Spring 2016
Westgate Shopping Center
Cambria Suites, EOD: 2017
corner of Page and Battery Park
Holiday Inn, EOD: 4th quarter 2016
190 Hendersonville Road near Biltmore Village
IN THE PLANNING STAGES
The former BB&T office building at Broadway and College will be remade into a new boutique hotel, The Vandre Nouveau Hotel, with condos and retail. EOD: 2017
The Foundry Buildings at Eagle and South Market streets will be remade as a boutique hotel, The Asheville Foundry Inn, Curio Collection by Hilton. EOD: December 2016
A TownePlace Suites by Marriott is planned for 39 Elm Street, just off Merrimon. EOD: 4th quarter 2016
A La Quinta Inn will replace one of the existing buildings of the Ramada Asheville Southeast at River Ridge Shopping Center. EOD: 4th quarter 2016
A Hampton Inn & Suites will replace the existing Biltmore Village Lodge, 117 Hendersonville Road. EOD: 1st quarter 2017
A Comfort Suites will replace the existing Super 8, 180 Tunnel Road. EOD: TBD
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