by Cooper Levey-Baker
WHEN I TALK TO BUSINESS LEADERS, NO MATTER WHAT SECTOR THEY’RE IN, there’s one thing they’re unambiguously excited about: the sight of new hotels and condos going up in downtown Sarasota. Those towering cranes represent one of the most obvious signs yet that our economy is on a major upswing.
Unless something drastic happens, downtown will see five new hotels come online within the next few years: a Westin at the corner of Gulfstream and 41; an Aloft at South Palm and Ringling; Hotel Sarasota at Cocoanut and North Palm; a Kimpton at Main and 301; and an Embassy Suites at Second and 41. If everything goes according to plan, that means 960 new hotel rooms, all within the downtown core. That’s a lot of inventory in a slice of the market that for years has been left to The Ritz-Carlton, Sarasota, the Hyatt Regency Sarasota and Hotel Indigo.
Could it be too much?
“I think that some growth is a necessity,” says Hotel Indigo general manager Leslie Power. “Do I think three, four, five hotels are needed? I do not.” Hotel Indigo is the last new hotel to go up downtown; it was built in 2006. While Power says the addition of more meeting and conference space to the market will be good for everybody, she worries that all those new hotel rooms might lead to oversaturation.
The “good news,” according to Visit Sarasota County president Virginia Haley, is that all five hotels won’t open at once. The Aloft (September 2015) and the Westin (summer 2016) are scheduled to open first, with a lag before the others come online. “One of the rules of thumb in the industry is you don’t want to add more than 2 percent of inventory at any one time,” Haley says. “If you bulk up rooms too quickly, you don’t have time to build up demand.”
To generate that demand, Haley’s office is contacting meeting planners and industry associations that host annual conventions, letting them know that Sarasota’s capacity for business gatherings will soon be growing. A large medical conference group, for example, had outgrown the meeting space at the Ritz-Carlton. With the new Westin right next door, the organization will have plenty of room, and has committed to keeping its conference in Sarasota.
“One rule of thumb is you don’t want to add more than 2 percent of inventory at any one time.”
“The danger zone would be if you were not aggressively marketing the destination, and you had the same number of visitors coming,” Haley says. “Then you’re cannibalizing the market.”
Making sure to increase consumer demand along with inventory is key, agrees Jan Freitag, a senior vice president with STR, a Nashville company that tracks hotel industry data. According to his company’s numbers, room supply increased 1.3 percent between October 2013 and October 2014, while demand increased 8.2 percent. The current picture looks “very strong,” Freitag says.
But the 960 rooms in downtown Sarasota alone could add up to a 20.6 percent increase in supply from 2013. Once all of these units are added to the mix, will the increase in supply begin to outpace the growth of demand?
The fundamental question is whether the new hotels will attract new travelers to the marketplace. Haley says yes. Both Aloft and Westin are part of the Starwood network, popular among business travelers, while Kimpton has an “incredibly loyal fan base” of younger, hipper, arts-loving tourists craving an urban experience.
While leisure travelers look mostly at prices and amenities and are less likely to be loyal to specific chains, a brand name can be very important to a busi-ness traveler, a “points junkie” who is on the road often and likes to stick with one company, Freitag says. Downtown Economic Development coordinator Norm Gollub agrees that the new brands could bring more business travelers to downtown, where they can walk to meetings with CPAs, financial planners, attorneys and more. The Kimpton, toward the east end of Main Street, will offer immediate proximity to corporate offices and the county courthouse, he says.
More visitors could make that end of Main Street much more vibrant after dark. The mall attached to the Hollywood 20 movie theater, currently on
the market, has struggled mightily ever since its construction. Gollub hopes the new owner
will “reprogram it to a higher
and better use.”
With a new World of Beer nearby, as well as the new McCurdy’s Comedy Theatre, Gollub hopes that east Main develops into a “hub of entertainment.”
Haley knows Visit Sarasota County needs to hustle to continue growing consumer demand, well before the full slate of hotels is open for business. Right now, event planners are making arrangements for conferences that are years away, she says. “We’ve got to step up our game.” ■