University of Arkansas Seeking $30 Million On-Campus Hotel Project

by Chris Bahn  on Monday, May. 27, 2013 12:00 am  

When University of Arkansas officials opened the Reynolds Center near the Walton College of Business in 2006, they knew the land directly behind it would one day be a prime location for something.

Directly across the street was the Harmon Avenue parking garage with more than 2,000 parking spaces. Plus, unused land isn’t exactly plentiful on the UA campus.

So they made sure to run utilities to the parcel to the east for the something that would be built there sooner rather than later.

Now under consideration for that spot is a full-service hotel featuring 125-150 beds with 13,000 SF of conference space and a price tag in the neighborhood of $30 million.

UA officials view the hotel and conference center as a way to expand the school’s executive education programs, particularly in business. What the UA would also like is for the hotel to be built without any financial or occupancy guarantee on the part of the university.

Proposals from three different companies will be reviewed by a UA committee on Wednesday to see if the vision for the hotel project can become a reality in the near future. It is unknown if the three respondents will be willing to assume all financial risk in exchange for the valuable on-campus location less than a mile from Fayetteville’s Dickson Street entertainment district.

“The University of Arkansas has a vested interest in the project, but does not have a proposed obligation of any kind toward the financial success,” David Davies, an assistant vice provost for finance and administration, said. “Respondents might come back and say, ‘This only works if …’ Then the university would have to make a decision.”

The idea of an on-campus hotel with conference center has been kicked around for a number of years, Davies said. A feasibility study conducted for the UA by PKF Consulting of Philadelphia suggests such a development would find a market.

Competing Hotels

PropertyRoomsMeeting Space SFOccupancy%Rate
Carnall Hall 49 3,100 47-52 $123-$128
Cosmopolitan* 76 14,000 43-48 $68-$73
Comfort Inn 65 625 30-35 $79-$84
Courtyard 114 1,500 54-59 $113-$118
Hampton Inn 95 900 54-59 $102-$107
Holiday Inn Express 110 375 47-52 $86-$91
Homewood Suites 96 756 52-57 $102-$107
Inn at the Mill 46 1,400 52-57 $95-$100
Staybridge Suites 109 1,050 56-61 $91-$96
Double Tree Club** 85 738 54-59 $92-$97
Holiday Inn** 206 44,000 44-49 $91-$96
Embassy Suites# 400 70000 54-49 $120-$125

*After renovation and renaming as The Chancellor in 2012, now has more than 200 rooms.
**In Springdale #In Rogers
Source: PKF Consulting study commissioned by the University of Arkansas. All hotels are in Fayetteville unless otherwise noted.

PKF’s market study evaluated the demand for hotel rooms at 23 properties in Fayetteville between 2008 and 2011. In addition to all the hotels in Fayetteville, the study also looked at selected hotels of “better quality” in the region. According to the survey of 12 “quality” hotels, PKF found an average occupancy rate of 52.2 percent. Based on that demand for rooms combined with the location of the available land and other factors, including conference space available in northwest Arkansas, consultants told the UA that the campus would “create a healthy environment for the proposed conference center to sustain successful operations in the longer term.”

“The outlook for the Fayetteville area lodging market is positive,” PKF wrote in its market study. “The additions to supply will likely have a short term negative impact on overall occupancy levels. However, given these hotel additions will include meeting and function space … we believe with appropriate marketing efforts by management, these properties are anticipated to generate new demand in the market place mitigating impact in the longer term.”

 

 

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