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Recession stalls Tampa Bay area hotel projects

Construction continues on the Aqualea Hyatt Resort on Clearwater Beach. It is one of the few local hotel projects moving ahead.

JIM DAMASKE | Times

Construction continues on the Aqualea Hyatt Resort on Clearwater Beach. It is one of the few local hotel projects moving ahead.

Tampa entrepreneur Kiran Patel promised a landmark beachfront resort for Clearwater Beach. But the best he could deliver this month was a paved parking lot for spring breakers.

St. Petersburg officials who ache for a new luxury hotel downtown are still waiting, too. Developers of the long-delayed Grand Bohemian asked the city last month to give them three more years to start building on the weed-strewn lot next to Progress Energy's Florida headquarters.

Both ambitious projects stumbled a year before the economy soured. But the recession delivered a double whammy that largely shut down hotel construction in the Tampa Bay area and across the nation.

Along with other commercial lending, financing for large hotels dried up late last year. Meanwhile, the lodging industry struggles with sharp declines in business and vacation travel. That makes investors wary of putting money into hotel projects with uncertain prospects.

"This is causing many developers to retreat to the sidelines to await a bottoming in economic conditions and a thaw in the lending environment,'' according to a recent report by Lodging Econometrics of Portsmouth, N.H., which tracks hotel projects.

Nationally, the 279 construction starts in the last quarter of 2008 were the lowest since early 2006. More than 400 projects were canceled, the most Lodging Econometrics recorded since starting business in 1995.

Eleven Tampa Bay area projects were canceled or delayed last year, up from just six in 2007. Only eight broke ground, compared with 14 a year earlier.

"Bad projects will probably get abandoned,'' says George Glover, president of BayStar Hotel Group in Tampa, a hotel owner and developer. "Good projects with solid fundamentals will get done, but it'll be another year."

He knows firsthand. His company is developing a Hotel Indigo in Tampa's Channel District. When the city approved plans last fall, Glover predicted construction would start before year 'send, with the 168-room boutique hotel opening in early 2010.

But the lender wanted more equity in the $29 million project and required him to document everything in his business plan. The schedule now has groundbreaking set for late this year. It won't open until 2011.

In Tampa's West Shore area, MetLife doesn't have a time line for the 260-room upscale business hotel included in plans for the MetWest International development across from International Plaza.

Originally slated to open this summer, MetWest consists of a single office building and retail space. The other two office towers and the hotel are on hold until demand perks up. "We're conscious of what current market conditions are and are on a different timetable,'' said Christopher Breslin, a MetLife spokesman.

Clearwater city officials are anxious to see new hotels spring up to bolster tourist businesses on Clearwater Beach. Thousands of guest rooms disappeared over the past decade as mom-and-pop motels were razed to make room for gleaming condo towers.

"Instead of condos that are only occupied three or four months a year, we want hotel rooms that get fresh occupants weekly — with full wallets,'' says Mayor Frank Hibbard.

You can glimpse his vision from the lushly landscaped BeachWalk promenade, where construction moves ahead on the Aqualea Hyatt Resort. The 250-room condo hotel with a spa and high-end restaurant is scheduled to open its doors in December.

NJR Development nailed down financing before lending markets froze up last year. Two other major projects didn't and now are stalled.

A cardiologist and wealthy philanthropist, Patel asked the city in November for more time to get his $250 million Clearwater Beach Resort & Hotel on track. His partner, developer Related Group of Miami, hasn't been able to find a lender, he told the City Council.

Council member Paul Gibson griped that Patel was unable to get the project started after receiving city approval in 2004 "when money was available and flowing like water.''

Still, the city extended his deadline one year to 2011 to begin building the resort with 250 rooms and 200 time-share units. Patel agreed to put a paved parking lot on the site, which had become overgrown with weeds.

In October, the city green-lighted another developer's plans for a dramatic-looking, crescent-shaped hotel where the old Adam's Mark hotel once stood.

Ocean Properties, an international developer that operates more than 100 hotels, showed detailed engineering plans for a 15-story, 230-room hotel with a restaurant, bar and five-story garage. That was the last the city heard from Ocean, said Michael Delk, Clearwater's planning director.

The company has until October 2011 to apply for construction permits, he said. Ocean officials didn't return calls for comment.

The Kessler Enterprise, developer of the Grand Bohemian in St. Petersburg, blamed the economy for the hotel's delay. Its lender put a moratorium on hotel financing and can't even guess when the clouds might lift, the company wrote city officials last month.

A few smaller hotel projects are moving ahead.

Decade Properties will use cash to build a 108-room Holiday Inn Express near Pier 60 in Clearwater Beach. It's nice to not have to rely on jittery lenders, said owner Jeff Keierleber. Isn't he worried about opening a new property — even if it's not until late 2010 — if the economy still stinks?

"If you didn't have some trepidation, you wouldn't be sane,'' says Keierleber, who owns the Clearwater Beach Holiday Inn. "But we appeal to a different customer. We're not the high-end guy on the block.''

Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

Hotels on Hold:

Frozen finance markets and worries over slumping room rates and occupancy have slowed the pace of new hotel construction. Here are some Tampa Bay area projects that are delayed.

Clearwater Beach

-- Clearwater Beach Resort & Hotel

101 S Gulfview Blvd.

250 hotel rooms, 200 time-share units

Status: Construction expected to start by 2012

--Ocean Properties project (old Adam's Mark site)

430 S Gulfview Blvd.

230 rooms

Status: Development approval through 2010

St. Petersburg

-- Grand Bohemian

320 Central Ave.

200-275 rooms

Status: Seeking extension to start construction by 2012

Tampa

Metwest International Hotel

Boy Scout Boulevard & Lois Avenue

260 rooms

Status: In design

Hotel Indigo Channelside

125 S. 11th St.

168 rooms

Status: Construction set to start late 2009/early 2010



Hotels on hold

Frozen finance markets and worries over slumping room rates and occupancy have slowed the pace of new hotel construction.

Here are some Tampa Bay area projects that

are delayed.

Clearwater

Beach

Clearwater Beach Resort & Hotel, 101 S Gulfview Blvd., 250 hotel rooms, 200 time-share units.

Status: Construction expected to start by 2012.

Ocean Properties project (old Adam's Mark site), 430 S Gulfview Blvd,,

230 rooms.

Status: Development approval through 2010.

St. Petersburg

Grand Bohemian, 320 Central Ave., 200-275 rooms.

Status: Seeking

extension to start construction by 2012.

Tampa

Metwest International Hotel, Boy Scout Boulevard and Lois Avenue, 260 rooms.

Status: In design.

Hotel Indigo

Channelside, 125 S 11th St., 168 rooms.

Status: Construction set to start late 2009/early 2010.

Recession stalls Tampa Bay area hotel projects 03/21/09 [Last modified: Saturday, March 21, 2009 4:31am]

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