Corporate business drives hotel industry in Charlotte, N.C.

Like many of the top 50 markets in the United States, Charlotte, N.C., is a focus for hotel developers. According to Lodging Econometrics, the construction pipeline comprises 42 properties with 4,938 rooms. The hotels in the pipeline represent 15 percent of the market’s existing room supply.

Charlotte has a diverse set of demand drivers that keep the market’s average rate and occupancy high in most submarkets, said Janet Snyder, SVP, consulting and valuation for HVS.

“Charlotte is mostly a corporate-driven market. It has a lot of Fortune 500 companies and large headquarters offices, which drives a lot of business,” she said. “In addition, the Charlotte-Douglas airport is a big driver for the market.”

Leisure business also helps the local hotel economy, she said. In addition to museums, top-quality restaurants and nightlife, Charlotte is home to the 5-year-old NASCAR Hall of Fame.

According to the Charlotte Regional Visitors Authority, the economic impact of tourism in Mecklenburg County increased 6.1 percent in 2014, with visitors accounting for $4.9 billion in spending. The county accounts for 23 percent of all tourism expenditures in North Carolina.

Snyder said most group business Charlotte attracts is related to the city’s corporate infrastructure.

“Actually, the convention business has been down lately because hotel demand is so high hoteliers aren’t willing to accept the lower rates needed to get group business,” she said. “Another challenge for Charlotte has been the lack of a single, big-box convention hotel.”

According to the visitors authority, the number of convention center roomnights booked declined from 202,000 in 2014 to 161,000 this year.

Inside the pipeline

More than half of the hotels in the development pipeline are in two Charlotte submarkets—central business district/airport and Rock Hill/Monroe—with 12 hotels under development in each area.

The upper-midscale (18 hotels with 1,935 rooms) and upscale (17 hotels with 1,908 rooms) segments dominate the pipeline. Two brand companies—Hilton Worldwide and Marriott International—have the most properties under development. Sixteen hotels with 1,887 rooms carry Hilton flags, while 12 Marriott-affiliated properties with 1,380 rooms are on the drawing boards.

Most of the pipeline is back-loaded with most openings scheduled for 2017 (21 hotels) and 2018 and beyond (15 properties). Just three hotels with 354 rooms are opening this year; next year will see six openings.

Recent openings in the market include the 170-unit Embassy Suites/Ayrsley in southwest Charlotte. Griffin Stafford Hospitality operates the hotel, which opened in July.

 Wave of dual-branded hotels

Three dual-branded hotel projects are in the Charlotte development pipeline.

Construction recently started on a dual-branded project on the top floors of a building in the EpiCentre mixed-used development in uptown Charlotte. Vision Ventures is developing the project that will include a 116-room Residence Inn and a 184-room AC Hotel by Marriott. McKibbon Hotel Group will manage the property, which is scheduled to open in 2017.

In the SouthPark submarket, Crosland LLC and Alta Financial Services are developing a six-story, 270-room Hilton Garden Inn and Homewood Suites. Chartwell Hospitality will operate the hotels, which open in late 2016.

In a location four miles from the Charlotte airport and six miles from downtown, MJM Group is building a dual-branded Fairfield Inn & Suites and a Residence Inn. The Fairfield has 91 rooms and the Residence Inn 113 units. Midas Hospitality will manage the property.

Charlotte-based SREE Hotels recently started construction on a 195-room SpringHill Suites in uptown Charlotte near the Time Warner Cable Arena. The hotel opens in 2017. The property will feature a 3,500-square-foot rooftop meeting space.

In September, OHM Group broke ground on a 123-room Holiday Inn Express & Suites in the southern suburb of Ballantyne near the South Carolina border. The hotel will open in late 2016.

Photo: The Embassy Suites Charlotte is one of 10 properties SREE Hotels operates in the market.