Mike Wampold spent months in late 2013 and early 2014 putting together the pieces to develop a new hotel in an old building in the heart of downtown.
He acquired the historic LNB Building at 150 N. Third St. He lobbied state lawmakers to create a tax increment financing district. He also began negotiating for a franchise agreement with Marriott, one of the most prestigious hotel chains in the industry.
Unbeknownst to Wampold, however, another group of developers—Windsor Aughtry of South Carolina—also had plans for a downtown hotel and also had its eye on a Marriott franchise. They, too, wanted to build on Third Street, and their property was an empty lot just one block from Wampold’s building.
In the end, Windsor Aughtry got the franchise, most likely, say industry experts, because Marriott almost always prefers to fly its flag on newly constructed buildings. In early October, the developers announced plans to build a 147-room, eight-story Courtyard Marriott. It will break ground in 2015 and open a year later, becoming the sixth hotel in downtown Baton Rouge.
For Wampold, the outcome was a setback but only a temporary one. The developer is still moving forward with his hotel project and is currently in talks with an unnamed hotel chain. He hopes to have an announcement about a franchise agreement by the end of the year.
That two big developers would be developing competing hotel projects downtown would have been almost unheard of a few years ago. That they would be building them just a block away from each other at a time when downtown already has five hotels within a 2-mile radius seems almost crazy. But Baton Rouge is in the midst of a hotel boom, and downtown is ground zero.
The growth in the local hotel industry is not just confined to the city’s historic center, however. It’s occurring throughout the metro area. Since 2000, the number of hotels in East Baton Rouge Parish has more than doubled, while the number of hotels in the nine-parish Capital Region has increased 83%. In the past month alone, three new hotel projects have been announced, including the downtown Courtyard Marriott, a Candlewood Suites on Bankers Avenue and an extended-stay hotel in Gonzales.
For now, at least, statistics suggest demand exists to support so many new properties, which is one reason developers are building them. The other is that financing for economy and limited-service hotels is easy to come by these days, so cities all over the country—not just Baton Rouge—are experiencing hotel booms.
Whether the market can support so many new properties in the long term is another question. Downtown hoteliers are counting on their new competitors to help grow the market by enabling the city to attract new conventions and meetings to the River Center. There’s no guarantee that will happen.
Then there’s the fact that most of the new development in the market is in limited-service hotels, not full-service, luxury properties. Those smaller hotels are competing for the same piece of the pie; and because they don’t typically have large meeting spaces or restaurants, they are limited in the type of customer they can attract.
Some hoteliers are already concerned. Every time a new property opens, they take a hit. To stay competitive, they lower their rates. But you can only go so low, and rates in Baton Rouge are already below the national average.
It’s a delicate balance and a gamble that Wampold, for one, believes is worth taking. But he is under no illusion it will be easy.
“You need to make sure you come to the market suited up to play,” he says. “Because it’s going to be competitive, and you better have the equipment to compete.”