Hotel Building Boom in Full Swing for Summit and Stark Counties in Ohio

Bennett Construction Management IncAkron, Ohio, July 23, 2014 – Bennett Construction Management Inc. finds itself right in the middle of a hotel building rebirth in Summit and Stark counties.

“We’re doing four of them,” said Bill Bennett, president of the Akron construction services firm that bears his name. “Fairlawn and three in Canton.”

Demand for new hotel rooms fell as part of the economic damage created by the Great Recession of 2007-2009. With no bank financing available, there was no building. That didn’t matter as much because people and businesses curtailed travel as well, curbing any urgency to add rooms.

But that’s changed as the economy has recovered. Travel is picking up. And banks once again are lending money to hotel projects.

“Now, there are quite a few going up in this area,” Bennett said.

They include Residence Inns by Marriott in Green and in the Montrose area of Bath Township, the Hilton Garden Inn in East Akron and in the Belden Village area of Stark County, Hyatt Place, Springhill Suites and Staybridge Suites.

More hotels are on the way, Bennett said. “Within the last month, we bid on two hotels we did not get. We’re negotiating one in Cleveland.”

Hundreds of additional rooms are being added in the two-county area, mostly along the Interstate 77 corridor. That’s good for jobs in construction and other industries while also serving as a positive economic indicator.

There are a number of things driving the demand for additional hotel rooms in the region, observers say.

Part of it is business generated by the still-early stages of Utica shale development south and east of Canton. A much bigger reason for hotel development in the Akron area is simply to meet demand caused by increased business travel, say developers and others.

Keeping tabs on all of the work are the convention and visitors bureaus in Summit and Stark counties.

“The economy is improving,” said Gregg Mervis, president of the Akron/Summit County Convention & Visitors Bureau. “There’s pent-up demand for visitations, corporate visitations.”

Tourism travel is also bouncing back, Mervis said. “People in today’s world like to travel.”

Starting several years ago, the oil and gas industry drove a significant part of hotel room occupancy in the Canton area as Utica shale exploration took off, said Allyson Bussey, assistant director of the Canton/Stark County Convention & Visitors Bureau.

“All the hotels were full,” she said.

But a combination of maturing Utica shale development with new hotels being built in the shale region’s hot spots more recently has changed the mix of hotel visitors to the immediate Canton area, she said.

“Now, we’re back to traditional corporate, leisure, sports,” she said. Many of the new Canton-area hotels that are going up are extended stay, which will appeal to the oil and gas industry as well as other corporate travelers, she said.

Davang Patel, a hotel developer and operator with properties in Cuyahoga Falls, Green and elsewhere, opened the 103-room Springhill Suites last month in the Belden Village area off Dressler Road NW. He said he bought the property years ago but had to wait to develop it because banks only recently restarted financing hotels.

“Other places are banking on gas and oil,” Patel said. “We’re not getting that in Canton. … I didn’t get my financing on the gas and oil business.”

Patel said he expects the Springhill Suites to attract corporate travelers as well as vacation and leisure travelers.

The hotel construction in the Akron-Canton area is a mirror of what is happening in the rest of Ohio — and the nation, say industry experts.

“It really is across Ohio,” said Matthew MacLaren, president of the Ohio Hotel & Lodging Association in Columbus. “There are over 100 hotels in the pipeline.

Renewed strength

A lot of the projects now underway were planned three to four years ago, at the height of the Great Recession, and are now doable because financing is available, Mac?Laren said.

“Business travel has come back. The economy is better,” he said.

The U.S. hotel industry has renewed strength, said Jan Freitag, senior vice president with Nashville, Tenn.-based STR, a company that monitors and analyzes the global hotel industry.

“We’re selling more rooms, not only over the prior year, but ever than before,” he said.

Room rates are also increasing, he said. Just in the last couple of months there has been a significant rebound in group corporate bookings as well, he said.

All of that is spurring real estate developer interest in hotels, Freitag said.

STR’s latest analysis as of June showed there were 3,183 new hotels “under contract” — either under construction, in final planning or initial planning phases — in the United States. If all are built, that would add 383,527 new hotel rooms nationally. The number of hotels under contract last month was up 11.6 percent from June 2013, according to STR.

Historically, the number of hotel rooms increases about 1.9 percent a year, Freitag said. Since January, the number of new rooms has gone up less than one percent, he said. That percentage will climb higher, he said.

“The pipeline is heating up,” Freitag said. “There are a lot of rooms under contract.”

Resilient industry

Most of the new construction involves what Freitag called the industry’s “workhorses,” brands such as Hilton Garden Inn, Hyatt House and Courtyard. “The full-service hotels are very, very expensive and take a long time,” he said.

The hotel building boom should continue into 2016, he said.

“Are there going to be street corners that are overbuilt? Yes, that will happen,” Freitag said, adding he was not overly concerned. “The industry is really resilient.”

Neil Wenger, chief financial officer for Wadsworth-based American Hospitality Group, which owns and operates hotels and restaurants, said he expects new hotels will continue to be built in the region for a while. The family owned company just spent $4 million to renovate and upgrade its Comfort Inn & Suites property, formerly a Ramada Inn, next to its Galaxy Restaurant in Wadsworth.

“In the next 18 months you will see a lot of development in this area,” Wenger said. “I think it will level off in 2016, at least in this neck of the woods.”

AHG expects to build an 84-room Holiday Inn Express in Medina County at the intersection of Interstate 71 and state Route 18 starting in 2015, he said. In addition, the company will build an extended stay hotel near two other hotels they already own in Mercer County, Pa., to take advantage of strong Marcellus shale business there, he said.

Newest in Green

Among the area’s newest hotels is the Residence Inn by Marriott in Green, which opened in early June on Arlington Ridge East, overlooking Interstate 77.

In the last five years, Green has added 193 hotel rooms to a total of 840 this year, including the new Residence Inn, said Valerie Wolford, city spokeswoman. Green has attracted hotel developers because of its proximity to Akron-Canton Airport and its location between Akron and Canton, she said.

“We’ve been very, very busy since we opened June 2nd,” said John Renner, director of sales for the Residence Inn in Green.

“We’re primarily a corporate hotel right now. Lots of companies in the area have been using us,” Renner said.

The hotel is made up of 80 suites, each with a kitchen, aimed at visitors who stay five days or longer, he said.

The Residence Inn already has booked long-term guests from the oil and gas industry involved in Utica shale development, Renner said.

But he said he does not expect the shale industry will make up a significant percentage of hotel business in the Akron area.

“We’re a little bit north of the boom, the oil boom,” he said. “We’ll still have some of them.”


Media Contact:
Jim Mackinnon
The Akron Beacon Journal
Tel: 330-996-3544
Click to visit website

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