Reading Through the 2015 Downtown Hotel Market Study

Raleigh Marriott City Center

In December 2014, the city started the process on a downtown hotels feasibility study. These efforts were to understand the Raleigh hotel market better and determine the benefits of going after another large hotel in the downtown area in order to support much larger conventions than we have today.

It has been widely talked about how lacking downtown Raleigh is with respect to the quantity of hotel rooms there are but the study would take this conversation one step further. Is another hotel the size of the Marriott, for example, really needed and if built how would it perform?

The results of the study are posted here and I’d like to go through it.


The study starts off by saying that the Raleigh hotel market is at a record high this year, recovering from and surpassing prerecession levels now at a 73% occupancy rate. Downtown, including nearby, hotels are working with an average $135 daily room rate. The business community are our biggest visitors, making up 46% of the demand. The Marriott is currently leading with per room revenue at $108 each and the Hampton Inn has the highest occupancy rate.

In terms of supporting the convention center, the Hampton Inn, Marriott, and Sheraton are the biggest supporters. The Holiday Inn, formerly Clarion, was the weakest but the report suggests that the recent change should help improve that.

2015 Downtown Hotel Study

The report breaks down the current hotel demand into three main categories:

The market benefits from a healthy mix of demand sources. Commercial travelers make up nearly half of all room night demand. Local businesses such as Citrix, Red Hat and PNC Bank drive much of this demand. The Raleigh Convention Center and hotels with function space attract meeting and group business, which makes up nearly one-third of occupied room nights. Leisure demand drives business on weekends and holidays.

That split comes down to 46% commercial, 32% meeting and group, and 22% leisure.

Seasonal demand does fluctuate with Spring and Fall being strongest, a dip in the summer, and the lowest hotel demand is in December and January. During the week, Tuesdays and Wednesdays are strongest because of that large commercial demand. After that, the leisure visitors are filling rooms on Friday and Saturday. Not surprisingly, Sunday is the lowest.

2015 Downtown Hotel Study

2015 Downtown Hotel Study

Insights From Event Planners

A part of the report analyzes responses from a survey that was taken by event planners. 116 responses from planners in and out of North Carolina were put together to bring us the following messages:

  • An inadequate hotel package is the greatest obstacle to attracting convention events.
  • Specifically, planners note the lack of hotels within walking distance to the RCC.
  • Event planners have a favorable view of Raleigh as an event destination. They like downtown dining and retail amenities and natural beauty.
  • The majority of planners prefer to host an event in downtown Raleigh in a full-service property with an upscale or upper-midscale brand.
  • Booking hotel rooms within walking distance to the RCC is important to event planners.

From the survey responses, some strengths and weaknesses were extracted. Our two biggest strengths were the amenities of downtown and the ease of access while our biggest weaknesses were due to inadequate hotel packages and limited air service.

2015 Downtown Hotel Study

2015 Downtown Hotel Study

2015 Downtown Hotel Study

The air service weakness, while being the second biggest, is still far behind the hotel package weakness so looks like this one needs to be addressed. The others are low enough to the point where we maintain them at those levels or better.

It looks like we’re also losing bookings due to the amount of rooms in one building. We don’t have a hotel where one can book a large block to support an event. With the Marriott being the biggest at 400 rooms, if this data point increases over time that might justify a hotel with more rooms in one location in the future.

Walking distance hotels are also very important with two-thirds saying it is a must.

2015 Downtown Hotel Study

From an event planners point of view, it looks like we have some work to do.

2015 Downtown Hotel Study

Market Outlook
The Market Outlook section focuses on upcoming projects that will provide a new supply of hotel rooms. About 750 new rooms are projected to be in Raleigh by 2018.

In downtown, we can look to this blog and elsewhere for news of projected hotel projects.

I’m getting a sense from this report that a couple of factors are tightly coupled. Occupancy rates will fall if we are building faster than demand which will cause the prices to drop. (ahem, and revenue) However, at this point, it seems that a larger hotel (400+ rooms) than we have available today is what is needed. It also needs to be near the convention center.

The report assumes that the planned 750 rooms through 2018 are going to be built and shows us what the occupancy rates would look like if we added an additional 400-room hotel to the market.

2015 Downtown Hotel Study

In 2020, we would see a higher occupancy rate in Raleigh with a 400-room hotel versus not having it or even getting something as big as a 1000-room hotel. It looks like a balancing act here for sure.

To get a hotel of this nature, public incentives could be looked at by the city. These include tax incentives, federal programs, infrastructure investments, or even straight cash. The report lists out what Durham has done in their downtown including $1.2 million from the city and county for The Durham Hotel and $1.3 million from the City of Durham for the Residence Inn.

The report then ends with some projected impact statements about what a new, 400-room hotel would do to the convention center. It would cause 31,000 new room nights per year, would result in an additional 30 events per year and an additional 51,000 attendees.

Wrap up

What I’m seeing here is that from a hotel market growth point of view we’re doing just fine. Hotels are being built in downtown as well as around the city. These are 100 to 200 room hotels that are considered limited service or boutique.

However, another way to look at this is how that hotel growth in Raleigh is supporting our convention center. It is likely that it will not and according to the projections, the convention center has plateaued versus seeing steady growth year-after-year. If Raleigh wants to compete in the convention business we’ll have to seriously consider adjacent, larger hotel development. (larger being the key word)

The report also makes some interesting statements about impediments to downtown hotel development:

  • “The primary barriers to development of full-service hotels are land assembly, overall development costs, and relatively weak average daily room rates for a downtown market.”
  • “The need for structured parking in a downtown hotel development increases costs and places downtown sites at disadvantage relative to suburban locations. The City should consider revision to its parking ordinance to allow for fewer spaces per room in downtown hotels”

I really like that second one. Why is our development code saying that a downtown hotel needs to have one parking space per room when almost half those staying are here for business? They most likely came in to the airport, got a cab into downtown, and can be perfectly fine without a car. This needs to be rethought, among other things.

Now, me personally, am wary about Raleigh’s plans to grow the convention business. Convention-dominated downtowns are pretty stale and lack the diversity of uses that I would like to see here at home. The convention business is also a pretty crowded one, with a huge list of competitors out there.

I would really like to see us find other ways to make the convention center more attractive versus just following the standard downtown convention playbook that all other cities are reading. What impact would a premier downtown museum, Dix park, or a hip shopping destination bring to the table?

It’ll be interesting to see where the city goes from here.

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  1. Thanks for this good information. What downtown Raleigh really needs is a GRAND BEAUTIFUL HISTORIC HOTEL. We are the only city of our size that does not have at least one! All we have is bland boring cheaply-built hotels. We tore down most of our historic hotels, but we still could restore our finest, the Sir Walter. It is beautiful, still has a grand ballroom, and is situated in the center of downtown. It is currently a home for low-income senior citizens. Most of them would probably be delighted to move to a new facility with larger and newer rooms, and not located near so much noise.

  2. Downtown Raleigh has lost its historic court house, our historic city hall, our historic movie theaters, our historic auditorium, our historic department stores. But we still have a chance to get back our historic grand hotel!

  3. “It looks like we’re also losing bookings due to the amount of rooms in one building. We don’t have a hotel where one can book a large block to support an event.” HUH. So building a couple 10 story suburban-style hotels in the heart of Downtown might just be huge wasted potential… WHO’DA THUNK IT? (*sarcasm*)

  4. Jake’s right.

    If this tells me anything, it’s that we need one large hotel, not three 10-12 story, 200 room hotels. The Enterprise lot is next to the convention center. Can the city do anything to incent the developer of that lot to go bigger, much bigger?

  5. William, I agree with your suggestion. That design would be wonderful for Downtown Raleigh. Of course, we cannot expect nice, common sense designs. God forbid we try to stand out :LOL:

  6. How did Greensboro manage to get such a large hotel (Sheraton) at the Koury Convention Center? According to the Business Journal it has 990 to the Marriott’s 400.

  7. Greensboro more than likely has such a large hotel due to its proximity to High Point and the furniture market which comes twice a year and pulls in more visitors than all the conventions in Raleigh combined. I wouldn’t be surprised if Greensboro had a higher concentration of hotel rooms than Raleigh.

  8. If there was a $ to be made these hotels would have been built. We are a smaller market and yes there are a few large conventions we miss out on because a group of 500 want to be in one hotel. The hilton garden is a great location and would have been done but the developer hasn’t submitted plans(only preliminary) . no one will built a 600 room hotel only to be 50% rented most of the time. If we had the DPAC in Raleigh and Hurricanes downtown, then it would be game on. You can’t throw money at them or they will all wait for it. You can’t give breaks on parking or everyone else pays for it. look at the residence inn….still waiting for that fancy motel 6 to be built.

  9. Yeah, but the Gov’t alone in downtown Raleigh is probably at attracting a large number of visitors and they are just not staying DT. A family member of mine use to be a superintendent for Caldwell County schools. He use to come to Raleigh 10 times a year for meetings. And he always stayed at the Hilton off Wake Forest Rd. We have demand and we are not meeting it.

  10. I have been trying to work to bring a decent size conference to town and found out that we may be missing out because we don’t have a hotel with enough meeting space internal to it (i.e. hotel package), not the hotel rooms itself. It seems RFPs that come from large meeting organizers typically specify lodging and meeting room requirements and if there is not a special effort to coordinate with the convention center we get skipped. I think it shows we need options both WITH and WITHOUT the convention center to land more conferences, particularly medium-sized one that the Convention Center may be too pricey for.

  11. Not that we should intentionally cannibalize other Raleigh hotels, but there is probably a significant amount of conference business going to the North Raleigh Hilton, Crabtree Marriott, Sheraton Imperial and others that could support another conference hotel downtown.

  12. Re: Chad – I also think that for several years Greensboro has hosted some of the major college basketball tournaments (or NIT?) and that always draws a big crowd.

  13. Stew , I did ask the investor today about the Deveraux Meadow site & he said that this was his first choice by far , but that it most likely would not happen . I hate this also !

  14. Voter turnout for our municipal elections was pathetic. Everyone wants to complain it seems but so few actually go to the effort of making their voice heard. In the mayor’s race only 35,700 votes were cast!

    Everyone here is aware of the powerful role our locally elected officials have over the future of our city. Too bad most everyone else does not (or doesn’t care).

  15. Stew , I voted ! I did talk with both John Odom and Mr. Weeks & both supported The Atlantic League & Raleigh baseball if the consultant study was positive for Raleigh baseball ! I also talked with Mary-Ann Baldwin & Russ Stephenson on some downtown issues .

  16. @DB
    Chad is spot on with the Furniuture Market. It hard to grasp what a big deal that is. People come from all over the world for that.

    In regard to Basketball, Charlotte and Raleigh actually host as many basketball tournaments as G’boro. PNC host certain rounds of the NCAA tourney every few years. It cannot host the ACC tourney b/c it is State’s home court. The ACC tourney is mobile and G’boro tends to host it 3-4 times a decade. The ACC has expanded from 9 teams to 15. The majority of the new teams are in the NE. Aka, Syracuse, Pitt, and Boston College. This is putting pressure on the ACC to pull the tournament further away from G’boro. For example, the ACC tourney will be played in Brooklyn, NY the next 2 years. Also, the “heavy hitters” in the ACC are usually the NC teams. These crowds don’t even tend to stay in the hotels due to Greensboro’s accessibility to the Triangle and Winston Salem.

    And finally, G’boro’s coliseum is not downtown either which gives them the same problem we have. But they do have a nice ballpark downtown. The ACC has fallen in love with playing their baseball tourney in Downtown Durham or G’boro.

  17. Hey Stew : Would you & anyone else that will ,
    please write the mayor , council , city manager
    on a baseball park @ Deveraux Meadow . If you do this , please make it very detail like your posting on this site . I will also do this ! Will this make a difference , probably not , but I’m still going to write . Thanks !

  18. Forget baseball. It’s a dying sport. We need Major League Soccer in downtown Raleigh.

    Building a stadium downtown with accompanying large hotels.

  19. Paul , You may get soccer in Raleigh ! A few months ago , I talked to Jim Goodmon’s VP/Sports George Hadel, & Mr. Hadel said that Mr. Goodmon is presently trying to get MLS to Raleigh ! Charlotte is also trying !

  20. Hi Dwight,

    I can write my new councilman about Devereux Meadows although I doubt it will do any good. Not being a pessimist just a realist here.

    The thing is the City of Raleigh paid Sasaki Associates big bucks to develop a downtown plan which was approved by the council not long before the election. There was also a “Downtown Plan Advisory Committee” made up of 28 local business owners and individuals who are now, I’d say, vested in seeing the plan move forward as-is.

    In that plan Sasaki recommends building connections for “Glenwood Green” (as they call it) by converting Devereux Meadows into a greenway and park. The Sasaki plan also recommends major redevelopment of the south side of town with a sports complex included as an option.

    I hate to say it but this baseball investor fellow should have been advocating for a ball park at Devereux like two years ago. The train has already left the station and is steaming down the tracks. It would have been cool though.

  21. Who cares where the ballpark is as long as its downtown. South of downtown is the better option, that area needs to be redeveloped. No room at Devereux, your land locked in this area

  22. Stew , I understand ! Actually , the investor started 3 years ago . If you don’t mind , please write your new councilor, asking him to support bringing baseball back to Raleigh ! I think this would help ! I did this yesterday . Thanks !

  23. Personally, I’ve grown tired of the baseball talk. It would never even be MLB so who cares. And soccer? Please. I could really care less to get anymore sports here. Sure it’d be great to have the Canes downtown at least but again, who cares; our city is much too centered around creative culture (music, art, comedy, food) to have to worry about sports, which to me is only a good thing. I’d rather see Devereaux be a nice park anyway. Any money that would go to attracting/financing a sports stadium/team should go to the arts. We’re much closer to being a Portland-esque Arts city anyway, should really just keep that momentum going. Nobody knows Raleigh because “oh that’s where the Canes play!” – no. Raleigh is the “oh I’ve heard they have good food” or “I’ve heard they have an awesome music scene there” city. Let’s keep that going instead of worrying about bringing a Minor minor-league baseball team or.. ugh.. soccer. LOL soccer.

  24. Jake, do you even Portland, bruh? Portland is known as “Soccer City USA”, not “Arts City USA”.

    And yes, baseball is boring and a dying sport. And for an investor to even consider Devereaux Meadows for a baseball stadium should give you an indicator how small-time, mickey mouse, not realistic they are.

  25. Soccer! The sport of future generations. I would fully support putting the Railhawks downtown in a new arena. MLS size stadiums are smaller and quite inexpensive comparatively to other sports. I agree that baseball is sport for older generations. Besides, we already have minor league teams in Durham and Johnston counties. I do not see it happened and we should move on… IMO

  26. We have some of the best youth soccer programs here in the triangle. CASL has nationally ranked youth teams across all different age levels. The US national teams both men and women sometimes train and play at wake med soccer park. we have great college soccer here. There is great support for the railhawks. That’s always been part of the fabric of the triangle, more so than even the art and music scene, which is a much more recent development. it’s something kids, teens, and adults could all enjoy. Not to mention this is the most popular sport in the world and keeps growing especially here and with our youth. There is great momentum here. One may not love the sport or care for it. But think of what it could do for Raleigh and the surrounding areas. There is very little downside to this. We have transplants from all over the world who love the sport and would support it. I very much welcome the idea. Now if it can actually happen, that’s another story.

  27. Baseball TV ratings may be dying but attendance hasn’t changed much nationally from what I’ve seen. The Bulls have broken their own attendance record two years in a row. Also, Baseball is played several times a week, unlike Soccer. That being said, I don’t really care for any sports in downtown Raleigh if the city is footing any of the bill as I can think of a thousand other things to do with that money.

  28. Re: All this baseball talk – While I agree that it’d be nice to have some sort of sports-based thing (I’m being vague because I’m not tied to any level of play or particular sport) I think it’s been discussed before that Raleigh can’t have a minor league team like The Bulls without actually taking The Bulls away from Durham because of the way major and minor league baseball teams work. Anyone care to start that fight? I’m guessing not. It’s also the same reason the Mud Cats are way out there in Zebulon, even though they’re a step “below” The Bulls.

  29. In regards to Devereux Meadows and the realignment of capital and Peace street. The following article gives some insight on that general area! And a nice rendering of a new bridge.

    @Mike… you are right Portland is the self-proclaimed “soccer city usa”! They actually had some play-offs recently! It is also known as an arts center! I suppose it really depends on what the individual is interested in!

  30. DBDowntowner : “The Atlantic League” is a independent league that plays @ the AA level!
    They are not governed by the 30 mile rule . They want to expand from 9 teams to 12 teams &
    a former minor league player that played for
    St. Paul, Minn. is one of the investors in Raleigh working to build a stadium , hopefully
    downtown or close to downtown .

  31. @ Dwight

    If they expand here, wouldn’t they utilize the WRAL soccer fields before they consider building an arena?

  32. Hey Robert , Sorry , I should have explained better ! It is “The Atlantic Baseball League ” ,
    AA baseball & was started in 1998 .

  33. Baseball? More like boreball. If anything we should be trying to steal the Mudcats and bring them downtown the way Charlotte took the Knights out of the boondocks. If I really had to choose or fork over tax dollars I’d rather see minor league prospects, one of which might turn into something, compared to ‘professionals’ who aren’t good enough to get run in the big leagues.

    The city wants an entertainment district behind the Duke Energy Center. Anyone who paid attention to the PNC Arena usage negotiations recently knows that NCSU was trying to muscle the Hurricanes out. Let them have it. A new arena for the Hurricanes and concerts located downtown could be a huge driver for economic development. The state and the city would need to help with the money but the new developments around it would help them earn it back.

    That’s my two cents.

  34. Oh and I will add that MLS soccer at Dix park would be ideal. It would also compliment the entertainment district/potential new home for the Hurricanes due to close proximity. As more parents discourage kids from playing football due to how public the knowledge on concussions is, they push their kids towards soccer. The sport is only continuing to grow in popularity.

  35. It’s true that baseball would bring people downtown more days than soccer, about 70 home games per year. But a 10K-20K seat multi-purpose soccer stadium could be used for a lot more than just an MLS team. High school football, Shaw/St Aug’s football, concerts, community events, etc.

  36. @CHL
    I would love to see the Hurricanes get a DT arena. I really would. The PNC came together because the city seemed like an attractive place for the NHL to expand. NC State was in need of a new arena to remain competitive in basketball. I’m sure there is way more to the contract, but “wa-laa” NC State, one of the biggest land owners in the city thanks to its Vet school was able to put up land in a location that was convienant to them(NC State). Apparently this was more convienant at the time than the city trying to find a plot of land or the Hurrianes purchasing land. If you know much about professional sports franchises you will know that they NEVER want to pay for everything themselves. They love to think they are giving you the privilege of being in your town. When all the rumbling started a few years back between the School and the Canes it was due to scheduling. NC State stood by the contract that was in place and the Hurricanes tried to verbally slander NC State for adhering to the contract. If the Hurricanes want to pay for something, they can talk. I’m willing to listen. If not, they will have to deal with NC State. As far a clout is concerned in this town, the Canes are a few notches below NC State. Quite a few. The reality is, the city has missed on chances to build something downtown. Maybe they will get another chance at some point and not blow it.

  37. I don’t want to step on anyone’s toes, but I am getting tired of the baseball and MLS talk. We can’t keep expecting some monolithic structure to be built downtown to solve all of our problems. We have been talking about an arena downtown since PNC was built. It may happen, but we really should be focused on other things. I don’t want downtown to gain one more continuous dead zone or blank wall just because it’s going to attract people on one day a week. We should be planning for such in conjunction with other planning. Let’s focus on retail improvements, streetscape design, public space design, density requirements and traffic calming, along with the rare possibility for a sports stadium/arena could be built.

    I do appreciate the fervor behind it all, but it gets to a point where that fervor just becomes an expected, and somewhat tiring echo of sentiment. Look at how far downtown has come WITHOUT an arena/stadium. Hell, even PNC is trying to add some urban density around it because it knows that car culture is only going to last so long, and that downtowns/CBDs offer a chance for lingering presence. I’d be surprised if the next stadium/arena for these leagues isn’t announced for downtown, but until then, we should look at what is really necessary.

    Sorry for the rant…you all are awesome!

  38. If someone was really smart, they’d buy both the Hurricanes and the Railhawks. Both teams’ owners are looking to sell the clubs. They play in opposite seasons and can operate out of the same offices. That would mean one marketing division, one sales division, etc.

    I’m hoping the Railhawks move to downtown Raleigh. I love the stadium location that was presented in the 10-year plan. Perfect for a soccer stadium. Although, if Raleigh was able to get an MLS bid, I’d hope the team would change their name. The name Railhawks has no meaningful connection with NC culture.

    What do people think of Carolina Aviators SC. I can totally see myself hanging out downtown to cheer on the Aviators in a MLS game. And the name gives a nod to NC history.

  39. If we want to go with an aviators theme then perhaps we should call a new MLS franchise the KittyHawks. Nah, nevermind. :)

  40. The City of Raleigh should build an observation tower on the southern edge of downtown, similar to the one in San Antonio. A public/private partnership venture. Besides the touristy observation deck, include a restaurant. Toronto, Seattle, Dallas and Vegas also have one and St. Louis has the Arch, but there is nothing similar at all in the southeast. The city needs to think outside of the box. Sure it’s gimmicky, but it will give Raleigh great exposure if done properly. Call it Tower of the Carolinas or Aviation Tower or whatever. 600-700 feet in height.

  41. @ Dave

    I agree with your direction…but you know the City of Raleigh wouldn’t let something that tall be built inside the belt line! Lol…?

  42. Dave, I am completely on board with your idea! I hope people realize how beneficial that would be to our city. Great thinking.

  43. @Dave – now THERE’S an idea. 600 ft excessive? Please, I wish we had more buildings in the 500-600 ft range already.

  44. Gosh I feel like a negative Nancy with all of your ideas, but an observation deck/tower is another idea I think we should slow down on. Look at the Sunsphere in Knoxville as our model, not the Tower of Americas or Space Needle. What does the Sunsphere do for the city? I’m sure it gets plenty of business, but I still think it is a bit of a white elephant.

    If we take the tower idea and run with it, where are the visitors going to park? Stay? Eat? It would have to be far enough from downtown in order to get a better view, which would mean locating in Chavis Park. Expect a number of residents to not be on board at all.

    These ideas are great, really they are. You are all thinking out of the box, which is how great ideas get started. But, downtown needs a number of basic, infrastructural improvements and focuses taken care of before anything like that can happen. Our streetscape is pathetic. Our density requirements are laughable. Our retail is non-existent, even if we accept the small shops that litter downtown. The attractions we do have downtown are great, but they need visibility and marketing. This city should embrace the arts that call downtown home, the unique manufacturing that takes place here, and the large number of thinkers that collaborate downtown. It’s time we set Raleigh’s image up for a redesign. Continuing this guise of Raleigh being a place for families is great, but it’s what continues the bland nature of our structures. Let’s become radical with how to market Raleigh, and how to ultimately design this city.

    My two cents again are over…

  45. The tower idea, in addition to the specific idea, is basically a metaphor for doing something outside the box in downtown. I anticipate the streetscapes, retail, and transportation issues, etc. will hopefully sort themselves out. I certainly don’t advocate Charlotte style growth and really am amazed at downtown Raleigh’s growth since the 90’s. However, Downtown Raleigh is an untapped sleeping giant.

  46. Have you ever been to Camden? Not sure if that’s the best comparison to what would happen in Raleigh

  47. Bruce, I have been to Camden (from Philadelphia). I understand it’s a stretch, but my post wasn’t so much about Camden as it was about the league. I just wouldn’t be excited for the Lancaster Barnstormers to come to town.

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