Some concerns accompany Portland hotel construction boom

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PORTLAND — Hotel capacity in the city could expand by as many as 900 rooms in the near future.

With the growth there continues to be discussion about a workforce-housing impact fee tied to hotel development, and whether the city needs a convention center to help attract a steady stream of business travelers.

Plans are in place for hotels with 600 new rooms. Another 300 rooms are expected, but those hotel plans are not ready for Planning Board review.

This spring, the 178-room AC Hotel by Marriott at 158 Fore St. is scheduled to open, according to Holly Conway of the managing company, Norwich Partners.

A new, 86-unit Hampton Inn is under construction at 1210 Brighton Ave. on the city’s Westbrook boundary. The developer expects to open on the former Travelodge property next year.

The Hampton brand could also expand with a 126-room Home2 Suites at 203 Fore St., next to the Hampton Inn at 207 Fore St. Plans have been submitted to the city, but a Jan. 9 Planning Board workshop was postponed at the request of developers Chatham Portland DT LLC.

On Dec. 13, 2017, the Planning Board approved the first two phases of the master development plan for the former Rufus Deering Lumber Co. property at 383 Commercial St. The first phase calls for a 132-room hotel with adjoining conference center to occupy the stretch of Maple Street from York to Commercial streets.

On Monday, developer David Bateman said he expects to be back in front of the Planning Board soon seeking a conditional use permit for development on Fisherman’s Wharf that includes a 93-room hotel at 184 Commercial St.

In the offing are a 150-room hotel in the former Portland Co. redevelopment at 58 Fore St. West Elm Hotels has been selected by developers Jim Brady, Kevin Costello and Casey Prentice to run the property.

Plans are also on file with the city for a 148-room hotel at Thompson’s Point, but Planning Board site review has not begun for the Portland Co. or Thompson’s Point hotels.

The expansion wave is the second this decade for hotels in the Old Port. In 2014-2015, the Press Hotel opened on Congress Street with 110 rooms, the 120-room Hyatt Place opened on Fore Street, and the 130-room Courtyard by Marriott opened on Commercial Street.

During that period, the former Eastland Hotel also reopened as the Portland Westin Harborview Hotel, increasing its capacity by 50 rooms, to 289.

In a presentation to the Maine Real Estate & Development Association at Holiday Inn by the Sea on Jan. 18, Maine Innkeepers Association Director Steve Hewins said the hospitality industry in Portland is doing better than the rest of the state, but is not yet on par with the nation in terms of occupancy rates, average daily rates and average revenue per available room.

Hewins, the former director of Portland Downtown, said he expects continuing success, but sees labor shortages and the paucity of winter tourism as continued challenges.

In a Jan. 10 interview, Hewins said Portland continues to draw national notice as a destination, but there are tempering influences.

“My concern is that the economy moves in cycles,” he said. “We are at a perfect confluence of opportunity and limited space.”

Hewins said the sale last October of the Residence Inn by Marriott at 145 Fore St. by Norwich to Apple Hospitality for $55 million shows market strength. The Residence Inn is diagonally across Fore Street from the new AC Hotel by Marriott.

City hotels are now experiencing an annual occupancy rate of 64 percent, above the 60 percent in the rest of the state, but below the 65 percent measured nationally, Hewins said. Through last November, city hotel room rates averaged $138 per night and $89 in average revenue per available room. The latter amount is higher than the national average, and up from the comparable period in 2016.

But dips and spikes are seen seasonally, and in how rooms are occupied on weekdays and weekends.

“This is why I’ve been a vocal advocate of a convention center to sustain the infrastructure of the hotel industry,” Hewins said. “We have to be thinking about how we can draw in more business people for off-season travel and mid-week travel.”

Joe Dasco bought the former Deering Lumber site in December 2016, planning a mixed-use residential development. Plans changed last summer, when he eliminated 75 residential units in favor of the hotel, although 200 housing units are still planned.

“We are not hotel operators, we are real estate development,” Dasco said Monday. “But Portland continues to grow, there will be an increase in demand.”

The conference center is key to his plan because it can be an additional lure, but Dasco said there is more behind the decision to add a hotel.

“We see a need for a luxury brand hotel with higher-end services and to provide them for the residents as well,” he said of the entire project, where construction is expected to begin this spring.

Bateman, a developer of the Portland Harbor Hotel, which opened on Fore Street in 2001, said the new hotel on Fisherman’s Wharf will also fill the high-end niche.

“Franchises have opened in town with a very specific following,” he said. “The hotel we are looking at is a four- to five-diamond level service.”

Plans also include a 500-space parking garage and marine dispatch center for local water taxis, both of which fill other needs on Commercial Street, Bateman said.

“From our perspective, the reason we are keen on this location is it is where everyone wants to be,” he said.

While Hewins spoke at MEREDA about reductions in workplace visas and the overall labor shortage affecting the hospitality industry, City Councilor Belinda Ray said Jan. 17 she is as worried about whether hotel staff can live in Portland.

Ray said she supports a one-time fee on new hotel rooms, determined either by the size of rooms or the number of rooms, similar to other development impact fees levied by the city.

Fee revenues would go to the city’s Housing Trust Fund or rental assistance programs to bolster workforce housing.

A Nov. 3, 2017, memo from city Planning Department staff to councilors estimated some kind of linked fee could produce $100,000 to $250,000 in annual revenues.

“We know when you build a hotel, you need people to staff it,” Ray said. “One shortage we have in Portland is workforce housing. This makes the linkage clear.”

David Harry can be reached at 781-3661 ext. 110 or Follow him on Twitter: @DavidHarry8.

The 178-room AC Hotel by Marriott, left, at 158 Fore St. in Portland, is expected to open this spring, according to Norwich Partners. The company sold the Residence Inn, diagonally across the street at 145 Fore St, right, for $55 million last October.

Developer David Bateman on Jan. 22 said plans for development at 184 Commercial St.  in Portland will meet a demand for luxury hotel rooms.

Portland City Hall reporter for The Forecaster. Baltimore native, lived in Maine since 1989. A journalist since 2005, covering much of Cumberland and York counties. I joined The Forecaster in 2012.