Is there a glut of hotel rooms coming to downtown? Announcements for new projects seem to be occurring monthly. In reality, there are eight hotel projects planned in the downtown area totaling 643 (or more) rooms. Occupancy rates seem to suggest the market is not saturated. But announcements don't equal new beds as room rates need to match up with development costs. The cost to develop a new hotel is significant and it will be bankers deciding which projects move forward.
There are 9,163 hotel rooms in Erie County according to the latest Smith Travel Report; 1,798, or 19.6 percent, are located downtown.
Erie County has consistently been above the national hotel room occupancy rate average and developers have taken notice of the area's strong performance.
Two hotels are under construction downtown representing 128 rooms. Earl Ketry and Rocco Termini are converting the Webb Lofts into "Lofts on Pearl," a 32-room boutique hotel located near the Pearl Street Grill. It is expected to open next month. Benderson Development's 96-room Courtyard by Marriott at 125 Main Street will open next year. The two new projects represent a 7 percent increase in the number of downtown hotel rooms.
Eight projects representing more than 640 rooms are in the planning stage. Both Ellicott Development and Terry Pegula are proposing hotels for the Webster Block. Ellicott's would be a limited service 140 room hotel and Pegula's would be a full-service hotel built by Benderson Development with 200 rooms. A 200 room hotel would be downtown's third largest if built.
Most of the proposed hotels are in the 90 to 120 room range and limited service (no restaurant and minimal meeting and fitness facilities). Properties smaller than that are generally boutique hotels. Mark Croce's Curtiss Building hotel falls into the boutique category. The hotel component of the AM&A's Department Store redevelopment is also expected to be a boutique property. A hotel of unknown size is likely to be a part of the Statler Building redevelopment in the future.
The 640 rooms planned represent a 33 percent increase in the downtown inventory and an 8.4 percent increase in the number of hotel rooms in Erie County.
Supply growth in the area isn't limited to downtown of course. A number of hotels are planned or underway near the airport, in Williamsville, Amherst, and elsewhere.
With new hotels entering the market, older properties are updating to maintain their share of business. Hampton Inn and Hyatt both completed renovations. The owners of Adam's Mark, downtown's largest, has been planning a rebranding for some time.
How will the new construction impact the market? That depends on how many of the hotels actually get built and growth in the number of business and leisure visitors. In other words, I don't know.
The planned additions are targeted and smart. They aren't large 400, 600 or 1000 room convention center headquarter hotel behemoths. Downtown Buffalo's newest crop of hotels promise to be urban and unique, helping them stand out in the regional hospitality market. Let the market decide.