By Chase Castle
Plans for a Drury Inn & Suites in Coralville have been announced, signaling the latest chapter in the city’s ongoing redevelopment and upgrading of its hospitality offerings.
Drury Development Corp., the Missouri-based development group representing Drury Inn & Suites, announced last month plans to build a 180-room hotel south of East Ninth Street on First Avenue in Coralville, just south of Perkins restaurant.
John Dirnberger, director of development at Drury Development, said in a press release that the location’s neighboring businesses should help anchor the hotel, which a city staff member said would likely open in 2017, pending approval by the city council.
“The Iowa River Landing was a natural fit for us due to its convenient location and many amenities, including the proximity of the UIHC clinic and surrounding businesses,” Mr. Dirnberger said.
The announcement about the Drury Inn comes as multiple motels in the Coralville area prepare to close or undergo changes. Owners of the J&M Motor Lodge, a motel on Second Street in Coralville formerly known as the Capri Lodge, is in the process of closing, and the Days Inn, also on Second Street, was recently purchased by the Kum & Go convenience store chain.
The University of Iowa, meanwhile, had plans approved in September for the purchase of the Big Ten Inn, a 40-room hotel on First Avenue, for $1.45 million. The property owner continues to own and operate the hotel, and has until the end of 2016 to elect to close on the deal. UI plans to demolish the building and convert the property into green space until specific plans for the “strategic location” near the Iowa River Landing clinic and other university properties are established.
The Drury Inn is also far from the only new hotel coming to the metro area. Plans are in place for a Fairfield Inn by Marriott to be built on James Street in Coralville, close to the 100-room Residence Inn that opened in 2012, and Kinseth Hospitality Companies announced plans in January to build a 12-story Hilton Garden Inn in downtown Iowa City near the coming University of Iowa School of Music Building.
Coralville finance director Tony Roetlin said the more-upscale hotel offerings are likely to result in a net gain in hotel-motel taxes for Coralville due to the increased costs paid by customers, despite the losses of other local hotel or motel properties.
“If I were to speculate on the sort of average room rate for a hotel room in Coralville, I would have to think that it’s on the upswing because of the types of hotels that are coming and the types of hotels that are going,” Mr. Roetlin said.
In fiscal year 2014, which ended last summer, the city of Coralville collected about $18.6 million for the city’s general fund – the city’s chief operating fund which pays for police, economic development, community and general government services. Of that revenue, about $2.4 million was collected through hotel-motel taxes, which reflect about 7 percent of the total room sales generated by Coralville’s 24 active hotels and motels.
Mr. Roetlin also noted that Coralville is the fifth-leading city in Iowa in terms of hotel-motel tax revenues, behind Des Moines, West Des Moines, Cedar Rapids and Council Bluffs. The hotel-motel taxes in Coralville likely lead the state on a per-capita basis, he added.
Craig Walter, executive vice president of the Iowa Lodging Association, said the hotel expansion to some degree reflects the national economic recovery. However, the moves by chains such as Marriott, Hyatt, Wyndham and others also illustrates a trend within the hotel industry of specialized branding tailored to different populations known as “market segmentation.”
“And by that, I mean we have so many market factors that they’re trying to cover the market demographics for the future,” Mr. Walter said. “They’re building for what the needs they perceive to be down the road.”
Mr. Walter said growth in the Corridor area is particularly strong, as signaled by “lower-segment markets” descending.
“And we have a new market coming in to fill its gap,” Mr. Walter said. “So you’ve got your high-end [brands] – your Sheratons and Marriotts – and then everything else at the next level. And so you’re meeting market needs.”
At an informal meeting before Coralville’s Planning and Zoning Commission on March 4, a representative for Leland Consulting Group said a market study concluded that Johnson County can support a total of about 350 to 400 additional hotel or motel rooms over the next decade.
Mr. Walter said there is uncertainty, however, in measuring market demand.
“You can always have a market study say what you want,” Mr. Walter said. “But is there enough [demand] to be sustainable for everybody else down the road is a big question.”
Coralville Mayor John Lundell said he believes demand for new hotel accommodations exists.
“I think what we’re seeing is a combination of new demand just because of growth and people wanting to come here, and some of the older hotel stock being torn down,” he said. “So it’s a little bit of both, but it seems to be pretty strong.”