News

In zoning meeting for boutique hotel, competitors warn of a room glut

A rendering shows a proposed five-story 70-room hotel on North Church Street behind the Historic Courthouse.

By Bill Moss, Published: July 16, 2020

The owners of three historic hotels on Thursday raised questions about the need for more lodging downtown, saying that three pending hotel projects would create a glut of rooms that the market can't support.

The owners of the existing B&Bs spoke at a neighborhood compatibility meeting for the proposed Court House Inn, a five-story, 70-room hotel with a restaurant, bar, meeting space and courtyard. They said the addition of up to 500 hotel rooms in a six-block stretch of Church Street could flood the market and potentially drive down occupancy rates for all.

Stephen Barker and the Charlotte-based Catellus Group are seeking city authorization for the hotel on a three-quarter acre lot behind the Historic Courthouse on North Church Street between First and Second avenues.

The Catellus proposal comes in the wake of two bigger hotel projects that are in the works and has set up a feast or famine dilemma for the City Council. Identifying a need for a hotel-convention space downtown, the council has been negotiating with a Fletcher hotel development company to allow a Springhill Suites, with 80 to 100 rooms, and the Shipman family is seeking city zoning approval for a 200,000-square-foot hotel and condo development on the Cedars property on North Church Street at U.S. 64. The Springhill Suites project, which would go on the city-owned Dogwood lot, is on hold because of the pandemic, city officials say.

Michael Gilligan, owner of The Henderson, on North Church Street, Waverly Inn owner Mike Burnette and Charleston Inn owner Kathy Carter all opposed the development.

"Being in the hotel business, you need the occupancy here," said Gilligan, who worked for large upscale hotel chains before buying the Henderson. "Our bread and butter is spring, summer and fall," while winter is a season to survive. He said he's worried the hotels, especially the Springhill Suites proposed for the Dogwood lot, could fail. "If they're not reaching their financial goal, they will take the flag down, they will pull out. The last thing I want to see if a Motel 6 one block from Main Street. I just think we're overextending ourselves way too fast. We all want to see growth in Hendersonville but this is too much too soon."

The county currently has a room night supply of 649,340 rooms, Burnette said. The three proposed hotel projects would add 82,220 room nights countywide, a 13 percent increase, and would increase the room night supply downtown five-fold.

"My concern as an owner is that we will have too much in a short amount of time hitting the market but it could be devastating not only to properties being developed but to existing properties." More supply could drive down both rates and occupancy "and it could be very damaging to the market to have that."

Barker responded to the B&B owners' points about parking, design, the supply of hotel rooms.

"We believe that we're bringing a special type of hotel to downtown," Barker said. "This is a unique and independent sort of brand." While he acknowleged the new hotel rooms potentially in the pipeline "is a whole bunch to throw at the town at one given time, I would tend to believe they'll try to be staggered in their development so they wouldn't all come on line on the same day, so to speak."

"You have a downtown market, which has been underserved, and you have the expressway market, which has been pretty prolific," he said. "The market out there is predominantly travel oriented. The downtown market is the downtown market."

He envisioned collaboration among the smaller hotels, sending overflow guests to the B&Bs.

"I do take your comments very seriously," he said. "Occupancy and rates are sometimes elements. I have seen the same thing happen, where it goes the other way" because new hotels draw more traffic overall.

"The hotel is designed around a lot of personal relationship with our guests," Barker said. "We pride ourselves on bringing products to the market like this that are in the culture and environment of the existing area. We really enjoy your downtown. You have a jewel of a downtown."

At five stories, the building would tower over some buildings on North Church Street.

"It will be under the 60 feet standard," Barker said. "It will definitely be dwarfed by the Courthouse, which will be in front of it basically, and hopefully add a new dimension to that particular area."

Ken Fitch, a community activist and regular commenter on rezoning cases, said the building would be out of scale with surrounding properties.

"He has a great point," Barker said. "It is a tall building but it's less tall than the Courthouse, which is very tall and significantly higher than this building."

Jeff Justus, the owner of the Mountain Inn & Suites on Upward Road, a commercial real estate broker and the seller of the vacant lot the Court House Inn would sit on, praised the project.

"I was really surprised at the look of this hotel," he said. "I think it is an asset to downtown. I don't really fear the occupancy rate that we might lose to this hotel for my hotel. I think people that would stay at this hotel are people that may have never stayed in Hendersonville. ... If it were up to me, I would skip the Dogwood parking lot (hotel) from the city point of view."

Barker said that "all boats would rise" when hotel guests visit restaurants and shops downtown.

"The economics of that transferring to the local environment and local economy is pretty significant," he said. "So I think the answer to the question is it's hard to determine what the effect will be and when the effect will actually happen, which depends on when they put a shovel in the ground."

Charleston Inn owner Cathy Carter said the proliferation of new hotels downtown threatens the side-by-side B&Bs on North Main Street and The Henderson.

"We're small businesses," she said. "I feel like we're going to be the first ones to go if the market turns. It's just going to be a shame to lose three historical properties or one historical property downtown.

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EDITOR'S NOTE: An earlier version of this story confused the Catellus Group with another company, also called Catellus, that specializes in large urban redevelopment projects.