The Fayette National Bank Building is the site of a planned 21c Museum Hotel.
Does the city need more hotels, or are we where we should be for a city of our size and with the number of visitors and conventions we draw each year?
A Conventions, Sports & Leisure feasibility study in 2011 on convention and event facilities in Lexington concluded that “the convention, conference and tradeshow market in any community cannot grow beyond the ability of its hotel base to accommodate out-of-town visitors.”
The Lexington Convention and Visitors Bureau estimates there are currently 66 hotels in Lexington that combine to offer a total of approximately 7,400 guestrooms.
“Overall, hotels are running an occupancy that is starting to grow,” said Jim Browder, president of the Lexington Convention and Visitors Bureau, in a recent interview. “Over the last several years, with the economy down, we’ve run about 60 percent occupancy annually. That’s not as good as we’d like to see. I’d much rather it be in the 65 percent-plus range.”
Browder added that, in the hotel business, when a market hits an annual occupancy rate of about 65 percent, the area typically will begin to see hotel development. “Developers will be watching that more than anything,” he said.
The 2011 study went on to say the availability of guest rooms to serve local conventions is critical in the success of such facilities.
“Inventory of guest rooms in a city is measured in different ways, including the number of headquarters hotel rooms and total rooms within a half mile of the convention center,” the study stated.
Lexington was included in a review of 17 other “competitive and comparable” markets in the region, including Louisville, Ky.; Cincinnati; and Nashville, Tenn. Lexington landed in the middle of the pack when it came to primary, secondary or tertiary hotels adjacent to its convention center.
But when rated on the number of hotel rooms located within a half-mile of its convention center, Lexington was ranked second to last. The three downtown hotels near the Lexington Convention Center, the Hyatt Regency Lexington (366 rooms), the Hilton Lexington/Downtown (367 rooms) and the Gratz Park Inn (44 rooms), have a total of 777 rooms within a short walk of the convention center, said the report.
Other large hotels within a few miles of the convention center include the Griffin Gate Marriot Resort and Spa (409 rooms), the Clarion Hotel (302 rooms), the Crowne Plaza Lexington – the Campbell House (287 rooms) and the Embassy Suites (230 rooms).
21c Museum Hotels plans to build an 80-room boutique hotel with a contemporary art museum and restaurant in downtown Lexington in the historic Fayette National Bank Building. Another hotel is planned for the yet-to-materialize CentrePointe development. Both the J.W. Marriott and Westin brands have been mentioned as possibilities for the site.
“When you look at 21c, I don’t think it’s going to devastate local hotel inventory,” said Browder. “Look way back [early 1980s] before my time here, when the Hyatt was built with 350-plus rooms, and then a big Radisson [now Hilton] was announced across the street. It certainly didn’t wipe everybody else out. People learned to do business and all caught up and now run nice, quality properties.”
Browder said Lexington and the nation might be ready for another growth spurt in the hotel business. One thing holding developers back might be availability of loan money.
“If you build 200 or 300 rooms, it only adds about 5 percent to the total local inventory,” he added.
But Ray Gillespie, executive director of the Kentucky Hotel and Lodging Association, is more cautious.
“Look at occupancy levels for existing properties in Kentucky for the past several years; they haven’t been too great,” Gillespie said. “We’ve had 59-61 percent occupancy.”
Gillespie added that he has been told a successful full-service hotel with a restaurant and all amenities needs a 70 percent occupancy rate.
Joe Fields, director of convention sales for the Lexington Convention Center, said Lexington’s ratio of hotel rooms to meeting space is appropriate.
“If we get more meeting space, then more sleeping rooms might be something to discuss,” he said.
Fields said meeting and convention planners want to know about a city’s triad — that is, “space, dates and rates.”
“They want the space they need, over the dates they need, at a rate that fits their budget lines. It’s tough sometimes to put all three together,” he said.
Browder said a little competition among downtown hotels is healthy.
“I was in the hotel business 32 years,” he said. “If I knew a new hotel was opening up across or down the street, I’d certainly put my game plan together to be sure they didn’t steal my customers. It’s just a competitive environment. Temporarily, there would be adjustments needed for the hotel opening, but also for other hotels trying to maintain share — but that’s just the cost of doing business.”