David Sangree was recently quoted in the Treasure Coast Newspapers’ online feature about the various ways municipalities can facilitate the development of a hotel in their area.

By: Colleen Wixom/TCPalm
Published: July, 2016

Hotel occupancy rates and increasing demand for rooms make the county ripe for attracting more hotel chains — depending on what incentive package is offered, industry analysts say.

Occupancy has steadily increased over the past few years, according to an Indian River County trend report prepared by STR Inc., a hotel data research firm based in Hendersonville, Tennessee. Last year, hotel occupancy increased to 61.4 percent, just within the 60 percent range hotels want to see when determining locations, Bobby Bowers, STR senior vice president of operations, said.

“The numbers look good,” Bowers said. “(Occupancy) is growing steadily.”

Hotels also want consistency throughout the year, he said. The report shows a 69.8 percent occupancy for the first five months of 2016, which looks good, he said. But hotels want to see the whole picture after the traditional summer decline, he said.

The occupancy numbers — and demand for lodging — have been noticed by county officials. On July 5, county commissioners directed staff to research hotels and short-term rentals to formulate recommendations on how best to meet tourism demand. Tourism this year increased about 4 percent — the equivalent of 50 additional hotel bookings — because of efforts by the Indian River Chamber of Commerce and tourism groups, Commission Chairman Bob Solari said last week.

With occupancy numbers increasing, now is a good time for the county to begin developing packages to attract hotels, Bowers said.

“The market is healthy and it’s growing,” Bowers said.

An attractive incentive package, coupled with the increasing occupancy rates, could interest some of the larger hotel chains, Bowers said.

“It’s all about the deal,” Bowers said. The easier a government can make it, the better, he said.

It remains to be seen, however, what kind of incentive packages the county would be willing to offer. Commissioner Peter O’Bryan already has said he would be hesitant to waive impact fees for hotels, which often come with low-wage jobs in housekeeping and for restaurant servers.

Still, the county has a number of options in addition to tax incentives, according to David Sangree, president of Cleveland-based Hotel & Leisure Advisors. They include procuring sites for hotel development, providing information to prospective developers about the location and obtaining feasibility studies on the hotel industry, Sangree said in an email. The county also could facilitate the environmental and zoning process for hotel developers, he said.

Solari’s wish July 5 — to bring new hotels to Indian River County within a year — is feasible if there’s government cooperation, analysts said. However, development could drag out for years as studies are done and permit applications are filed, they said. Getting financing often is the most difficult part for a developer, Sangree said.

Nationwide, the hotel industry overall is strong. But demand is very location-specific, he said. And there is competition, he said.

“This is definitely a trend throughout the country,” he said. “The national hotel-occupancy level and overall room demand in 2015 were the highest in history. Leisure, corporate and group demand is all stronger than historically. This has caused the substantial increase in proposed new hotel supply, which is occurring throughout the nation.”

A hotel developer would need to confirm sufficient potential occupancy and average daily rate in a given location in order for the property to be financially feasible. Any proposed hotel would need to generate sufficient net income to pay off debt and provide a return to the developer, Sangree said.