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Developer Dudley Webb met with a skeptical audience Tuesday when he talked to professionals in the tourism industry about the market for an upscale high-rise hotel that he hopes to build downtown.
Webb was the keynote speaker at a Bluegrass Hospitality Association symposium at the Lexington Center. He was met with questions mostly about the hotel rooms expected to cost about $200 a night in the CentrePointe project.
Where will business come from to fill a 200-plus room high-end hotel, he was asked. Will the project bring in new money, or just pirate business away from existing downtown hotels?
Larry Bell, general manager of the Hyatt Regency Hotel, asked what Webb's financial consultants found in their market surveys that made another downtown hotel look feasible.
Webb said there had been four market studies -- two by hotel chains, one by a consultant hired to conduct a financial analysis for possible tax increment financing, and yet another commissioned by The Webb Cos.
"All were in agreement that this project will create the lift that will (be absorbed) in the market without major negatives," Webb said. He conceded it might have an immediate impact as "new hotels tend to get the new business."
The proposed $250 million development has been met with resistance from those who want to preserve historic buildings on the block where CentrePointe is planned.
The project also needs approval on several government levels and will have condominiums and retail space in addition to hotel rooms.
The hotel rooms will be priced at about $200, some even $175, Webb said. "But with only 243 rooms, we think the market is there for a high-end hotel," he said.
"It's higher than what most of you are getting," Webb said, "but I think we're still in the affordable range for most convention-goers." A plus for the proposed hotel is its location on a block bordered by Limestone, Main, Upper and Vine streets that is within easy walking distance of the Lexington Center convention facilities.
Market consultants talked to business leaders on the need for a high-end hotel, he said, "It would surprise you the number who send their VIP guests to Cincinnati or Louisville because we don't have a 4- or 5-star hotel in the market. They were totally supportive."
Webb said the CentrePointe hotel would be a much higher-end hotel than the Hyatt, Radisson or Hilton and would not steal business away. "It's just a fact of life that this is a part of the niche market we think we need to meet."
After the meeting, Kristi Yahn, director of sales at the Hilton Suites, voiced skepticism about the market for a high-rate hotel. "We have an upscale hotel," she said. "The Webbs built our hotel. The Webbs built the Radisson. The same architect is designing this hotel. Yet our hotel is not upper scale enough."
The Hilton Suites is a leader in this market, running an occupancy rate of 76 percent last year in a market that does just over 60 percent, Yahn said.
"The demand has to be there," said Yahn, with 20 years hotel experience in this market. "It's not a matter of if you build it, they will come."
Webb said after the meeting that he's confident a high-end hotel would have strong occupancy. "The marketing prowess that new group will have in this community will make a big difference. It will give us lots of lift," he said.
