A rendering of Hawkeye Hotels’ new Fairfield Inn & Suites, expected to open next year at the corner of Coral Ridge Avenue and James Street in Coralville.

By Chase Castle
chase@corridorbusiness.com

Several new hotels near Coral Ridge Mall in Coralville are expected to be completed next year as a local and national spike in hotel construction levels off, according to industry observers.

Among the new additions is a property by Hawkeye Hotels, which owns a seven-acre plot at the intersection of Coral Ridge Avenue and James Street, just south of Highway 6. That site already features a Residence Inn, a Marriott brand that targets extended-stay guests, which opened in 2012. By summer 2017, Hawkeye Hotels aims to complete its second hotel there, a four-story Fairfield Inn & Suites.

“It has its own captive base [of customers],” Hawkeye Hotels CFO John Hall said of Marriott’s Fairfield brand, which largely caters to business travelers.

Mr. Hall said construction details are still being finalized, but the hotel should have rentable rooms available starting in mid-to-late 2017.

Also en route is a Home2 Suites by Hilton extended-stay hotel under the Sagacity Hotel Group, which plans to construct the four-story, 102-room hotel across the street from the Residence Inn on James Street.

Matt Traetow is the director of operations with Sagacity, which also manages the 95-room Homewood Suites at the Iowa River Landing, as well as the Comfort Suites east of 25th Avenue.

“It’s kind of an offshoot of the Homewood brand, with a few less amenities,” Mr. Traetow said of Home2 Suites by Hilton, which do not offer evening dinners with complimentary drinks as Homewood Suites do, for example, but do include breakfasts and in-room kitchens. Those services are particularly important to mid-tier, typically younger guests who travel on business, he noted.

“I call them ‘road warriors’ – the ones on the road anywhere from five days of the week on a project to two or three months,” Mr. Traetow said.

The Home2 Suites by Hilton should be open by the first quarter of 2017.

Sleeping business waking up

The growing number of hotels off Interstate 80 by Coral Ridge Mall represent a fraction of the recent boom in accommodations in the southern Corridor and throughout the United States.

A Missouri-based development group representing Drury Inn & Suites last year announced plans to build a seven-story, 180-room hotel south of E. Ninth Street on First Avenue at Coralville’s Iowa River Landing, just south of Perkins restaurant.

In December, crews with Kinseth Hospitality of North Liberty broke ground on a 12-story Hilton Garden Inn planned for the heart of downtown Iowa City. That hotel will sit at the intersection of Burlington and Clinton streets, immediately east of the new University of Iowa School of Music, and should open sometime next year.

Elected officials in Iowa City also advanced plans last year for a 14-story hotel located two blocks from the Hilton Garden Inn. That proposal, for the corner of Court and Linn streets, also includes a 15-story residential tower. That project, referred to as RISE at Riverfront Crossings, is being developed by CA Ventures of Chicago.

Nationwide, a total of about 132,000 rooms were under construction as of December, according to market research group CBRE Hotels Research, up from about 129,000 rooms in early 2015.

The Atlanta-based firm predicts that growth in the supply of lodging accommodations should continue to trail market demand for new hotels and motels through the end of 2017, at which point demand and new construction should slow. CBRE forecasts that national occupancy this year and next will hover around 66 percent, which is above the long-run market average of about 62 percent, which dates back to 1988.

Robert Mandelbaum, director of research information services for CBRE Hotels, said the county’s historically high occupancy levels were reached as national employment rates improved in the five- to seven-year period following 2008.

“To paint the broad brush picture, we’ve had this very strong recovery from the depths of the recession,” Mr. Mandelbaum said. “So now we’re starting to enter this period where supply is coming online faster than demand.”

Record occupancy levels also mean pricing power will belong to property managers. CBRE Hotels predicts that room rates nationally will increase by 5.5 percent this year and 5.8 percent in 2017.

Starting around 2018, Mr. Mandelbaum said demand is likely to stabilize, with new hotel construction likely to slow shortly after.

“And that’s sort of typical for what a cycle looks like in the lodging industry,” he added.

Hawkeye finds new nest

In addition to building its latest hotel, Hawkeye Hotels is constructing a new headquarters at the site of the new Fairfield Inn & Suites. The building will house about 20 employees, most of whom will be re-located from the company’s offices in Iowa City and Burlington, where the company is currently headquartered.

A significant portion of the company’s employees work remotely, Hawkeye CFO John Hall said, with only about 10 percent of the company’s corporate staff expected to work from the new Coralville headquarters. He noted that the company is also planning to make several new hires for newly created positions in the next 1-3 years, however, with candidate searches likely starting next month.

“So the Coralville location is going to give us quite a bit of visibility, but more importantly, the Coralville office will give us a lot more square footage, which we desperately need,” Mr. Hall said.

The new headquarters should be completed with staff relocated there before June. Mr. Hall said Hawkeye Hotels owns its headquarters at 1601 N. Roosevelt Ave. in Burlington, and plans for that building haven’t been determined.

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