2008-10-13 Overnight Sensation In Ewing

Overnight sensation in Ewing Developers reserve room for 3 new business hotels Monday, October 13, 2008

BY LISA CORYELL

EWING -- When Inn America Hospitality selected a Scotch Road industrial park to build its new Courtyard Marriott in 2004, the choice was viewed as a bold -- and perhaps risky -- departure from the perennially successful Route 1 hotel market. Now, nearly five years later, the Courtyard's undeniable success has sparked a surge of like development that has Ewing preparing for the arrival of three new business hotels along Interstate 95, even amid the economic downturn. "There was no question when we picked the site it was a pioneer site," said Randy Czik, president of the company, which is now called American Properties Inc. "There were no other hotel properties within miles, but our research showed there was a fairly substantial demand for one. Now our research has been proven correct. The hotel has performed very well where it is." So much so that American Properties is among the developers bringing new hotels to the area. The company's Element Hotel by Westin, a 127-room extended- stay facility, is under construction across the street from the Courtyard. It is slated to open next fall. Two weeks ago, two more hotels received planning approvals for that area. Ewing Hospitality will build its 127-room Hyatt Place on a site adjacent to the Courtyard. High Hotels Ltd. will build a 134-room SpringHill Suites by Mar riott in the Opus office park less than five miles away. What appears to be a glut of hospitality generates little concern for developers. They say the long- standing corporate presence of Merrill Lynch, Bristol Myers- Squibb and Janssen Pharmaceu tica -- coupled with the arrival of Capital Health System at Mercer hospital and Opus' PrincetonSouth office park -- will provide enough weekday customers for everyone. Corporate trainees, hospital visitors and vendors and auditors of all varieties are among the business the developers are banking on. "The demand is definitely there," said Sunil Nyak, the Hyatt Place developer. "Our feasibility studies show that with all the development going up, there is enough business to fill this hotel." His optimism is rooted in the long-accepted philosophy the hotel industry is a "street corner business," according to Jeff Higley of Smith Travel Research, a company that tracks hotel performance data. "If there's a market for a hotel, several developers will look at that," Higley said. "If one hotel will be successful, the others will be too. The biggest factor in any hotel development is where is your business going to come from." In addition to the weekly business generated by corporate travelers, Ewing's hoteliers are looking to tap into a brisk weekend business generated by local colleges, area sports

organizations and even tourist attractions like Six Flags Great Adventure and Sesame Place. Parents visiting for college homecom ing weekends and families in town for soccer tournaments or horse shows are the weekend crowds being counted on to keep the rooms filled. "That's a plus for us," said Frank McCabe, developer of the SpringHill Suites. "We're looking for some kind of leisure component on the weekends to keep it from becoming a ghost town. Ewing was a market that has the right ingredients: a strong business component along with a weekend leisure component." McCabe said his company had been looking at the Princeton market for about 15 years. At one point, High Hotels had plans to build a Hampton Inn at the Carne gie Center on Route 1, but the deal fell through. In recent years the company's interest in being on Route 1 has waned, he said. "All that growth has created a gridlock," McCabe said. "We saw it as a saturation point. Both the hotels and the development of business got to a point where it's very difficult to get back and forth along that corridor during rush hour. It kind of pushed development to the south. The land is there and a lot of people are beginning to notice. Where we are is a very hot area for development." Industry statistics show that even during the economic difficul ties over the past several years, Mercer County's hotel market has held its own against the national average. In the last five years, occupancy rates have hovered just below the national average while average daily room rates are consistently higher. More importantly, Mercer County's revenues per available room -- a calculation widely billed as the single best indicator of a property's financial performance -- have outpaced the national average. During those years, the number of hotel rooms in the county increased about 20 percent. Higley said Smith Travel Research's data show the United States is in a "definite downswing" in terms of hotel development. "The pipeline is not as robust as it was a year ago,' said Higley. "A lot of projects are being put on hold. Central Jersey is definitely bucking the overall trend. There's not a lot of places where three or four hotels are going up in one place at the same time." The industry anomaly spells good news for Ewing taxpayers, said Mayor Jack Ball. "We're going from a town with one hotel to a town with four," he said. "I think they're great ratables." The Courtyard Marriott generates more than $400,000 in tax revenues annually -- a portion of which goes to Ewing's schools and municipal government. The three new hotels are expected to generate similar ratables, Ball said. "You're looking at well over $1 million in new ratables," Ball said. "That's great news for our town, especially in these economic times when there are planning boards in other

municipalities in Mercer County that aren't even meeting because they have nothing to meet about. Ewing is definitely moving in a fast-forward motion."