In the past month, the Planning Commission voted down the Hyatt House and unanimously approved the Marriott Residence Inn near Second and Mace. The council will now have to decide which of the proposals, if any, to approve.
A year ago in November, the city contracted with HVS Consulting & Valuation to prepare an analysis of the Davis hotel market to provide an analytical and objective context to assist the city with the review of the applications for the Hyatt House and Marriott Residence Inn, two of the proposals for new hotels.
The council also approved the Embassy Suites Hotel Conference Facility at the site of the existing University Park Inn & Suites and Caffé Italia restaurant. That site will include a six-story 132-room Embassy Suites Hotel and 13,772 square feet of conference space.
However, that project remains in litigation and therefore has not commenced.
The HVS report came out in March, and it concluded “that the near-term development of a conference hotel facility with the addition of an extended stay hotel to be built shortly thereafter would be most beneficial to visitors, the City of Davis, other hotels in the market, and the overall community.”
However, HVS concluded “that the addition of another hotel, specifically another extended-stay facility, would not benefit the market for another four to five years after the initial extended-stay hotel has opened.”
Not everyone agrees with this analysis. Some argue for the PKF Consulting report, contracted by the Hyatt House developers, which saw the potential for four new hotels that would generate between $1.5 and $2 million in new revenue for the city. At the same time, existing hoteliers told the Vanguard last January they would prefer to see how the market handles the Embassy Suites addition before approving new hotels.
However, the status of the Embassy Suites hotel is unclear at best. Michael Harrington and company filed a CEQA lawsuit challenging the veracity of a MND (Mitigated Negative Declaration) designation and the quality of the accompanying traffic report for Richards Boulevard. In July there was indication that the lawsuit was about to settle, but it has not yet – there are conflicting explanations for that.
In the meantime, there have been questions about whether the hotel’s financing is in doubt – the Vanguard has received mixed reports on that with no official clarification.
The bottom line is the hotel is not built.
Despite protests to the contrary by some, the council seems likely to act on the assumption that the city needs one and not two of the extended stay hotels. Again, this is a bit tricky, given that part of the demand generator for a new hotel would be the hotel conference center.
If we operate under the assumption that the council will follow HVS recommendations, it seems obvious which route they are most likely to go.
The Davis Planning Commission voted 7-0 to approve the Marriott, in a meeting with almost no opposition to speak of. On the other hand, the proposal for the Hyatt House, as regular readers of the Vanguard are well aware, has been met by strong neighborhood opposition. In a contentious meeting earlier in September, the commissioners voted 4-3 to oppose the project.
There were a lot of concerns from the neighbors about privacy, and even though the developers proposed mitigation, there were concerns about the reliability of city trees and greenbelts to lessen the impact. There were also concerns about distance from the freeway, lack of nearby restaurants, and overall viability of the site.
If the council indeed approves just one hotel, it seems obvious which one they would take – as a path of least resistance.
At this point, we at least have to ask the question of what happens if the Embassy Suites does get built and what happens if it doesn’t.
As noted, the new Embassy Suites hotel would have 132 rooms and a huge nearly 14,000 foot conference center. Given that a large conference could generate the need for 300 to 500 rooms, it seems reasonable to see the need for at least one new hotel to accommodate the overflow.
As the PKF study notes, “A hotel with approximately 18,000 square feet of meeting space would typically feature between 350 and 400 guestrooms.” But the Embassy Suites will have just 132 rooms, which means that Davis will need other hotels to complement the Embassy Suites in order “to capture either overflow group demand that is booked at the Embassy Suites (but can’t be accommodated).”
PKF argues that at least three new sites can be “readily absorbed by the market,” and they find “occupancy is projected to increase to 67.0 percent in 2019 and further increase to approximately 70.0 percent in 2020 and 2021. It is at this level we project the Davis hotel market to stabilize. While this stabilized occupancy level is above the annual average occupancy level achieved by the Davis hotel market since 2007, it is in line with the year-to-date performance and is reflective of the growth occurring in Davis.”
Again, HVS sees a more modest need for hotels. But what if the Embassy Suites doesn’t get built for another five years? Can the current market sustain even one new hotel, absent a conference center?
These are critical questions. It is clear that the city needs at least one conference center. There is simply a lack of space in the city to accommodate large conferences. The Vanguard knows this as well as anyone.
While UC Davis has a conference center, and the Vanguard utilized it once, even with the facility itself donated for use by the university, the rules and regulations made the event more costly than off campus. In the city, unless you want to rent the Veterans Memorial or Senior Center Multipurpose Room, finding space for large gatherings is difficult and those sites are both limited.
As a consumer, I would argue that not only does the city desperately need one hotel conference center – two would probably be well-utilized and become demand generators for more hotel usage.
In the staff report for the Marriott it notes, “This area includes one other vacant parcel that could potentially accommodate hotel or conference center use, subject to property owner interest and City approval of any Conditional Use Permit application. However, no interest has been expressed for hotel development by other property owners in the designated area.”
Getting someone to finance another hotel conference center would be a tricky proposition, but it might be needed, particularly if Embassy Suites has difficulty bringing theirs to completion.
The key considerations at this point are: where does the Embassy Suites project stand? Do we need zero, one or two additional hotels? Is an additional hotel viable without a conference center?
—David M. Greenwald reporting