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Dayton sees new hotel room explosion: What’s really going on

The combined 675 new hotel rooms planned for six new buildings in the Dayton area are another sign of a healthy economy that boasts low interest rates and high consumer spending.

“The economy is very good right now and hotels are a real estate asset. They’re basically a business with a lot of real estate. So as the economy goes, so goes the hotel industry,” said Terry Baltes of Baltes Commercial Real Estate, which specializes in hotels.

He said right now “it’s good to be a hotel owner,” with interest rates at historic lows and both hotel occupancy and average daily rate at all-time highs.

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This year, the national average cost of a hotel room will increase 2.4 percent, demand will increase 2.3 percent and supply will increase 2 percent, according to Smith Travel Research.

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Dayton will have a good balance of hotel rooms when the current projects are done, Baltes said, improving a shortage of quality hotel rooms the region has seen since the recession. There’s a phrase in the hotel industry, “it’s not oversupplied, it’s underdemolished,” Baltes said.

“It’s not that we had too many rooms,” Baltes said. “It’s that we didn’t have the right kind of rooms.”

Many area hotels that have closed in the last decade haven’t done so because there wasn’t enough demand, Baltes said. Instead, the old buildings weren’t cost efficient anymore and didn’t have what consumers wanted with outdoor entrances that felt unsafe and fewer amenities.

“Consumer demands have really changed. They want all the amenities they have at home,” he said. “They want the big flatscreen TV; they want a hot breakfast in the morning.”

The most recent new hotel plan is by developer Shaun Pan, who said he is waiting to hear back from the Hilton franchise about his request to build Dayton’s first dual hotel. The $15 million to $20 million project would offer 100 rooms of Hampton Inn & Suites and about 75 rooms of Home2 Suites at a location off Edwin C. Moses near Elizabeth Place.

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Dual-brand hotels are growing in popularity because they offer short-term and extended stay options in one location, which attract multiple types of clientele and can cut costs because of shared amenities, facilities and overhead, industry groups say.

South Edwin C. Moses already has several hotels. Just down the road, a new $8 million Holiday Inn Express is being built on three acres of land on the 2100 block of Edwin C. Moses and will have about 95 rooms. It adds to the existent Marriot at the University of Dayton and the Courtyard by Marriot.

And that’s not all.

Downtown Dayton will get its first new hotel in decades in the booming Water Street District. The Fairfield Inn & Suites will have about 98 rooms at East Monument and Patterson Boulevard.

Outside of Dayton several other hotels in suburbs are in the works as well. A permit was filed in June for a new WoodSpring Suites on Maxton Road in Butler Twp. at Miller Lane; a Tru by Hilton hotel was proposed for the south side of Colonel Glenn Highway near the Beavercreek Meijer and an application was filed to build a 100-room Home2 Suites hotel near the Mall at Fairfield Commons in Beavercreek.

The market will absorb the current plans, Baltes said. Dayton is right at the crossroads of Interstates 70 and 75 and Wright Patterson Air Force Base continues to grow and add employees, leading to a good market for these hotels.

Aside from the initial construction investment, new hotels continue to drive the economy by attracting new conventions and large events to the city.

“Lot’s of times when there are major events in town, whether a company chooses to book in Dayton, Ohio, or not depends on how many rooms are available,” Baltes said.

If the construction continues at this pace, though, there will be a surplus. But Baltes said he doesn’t foresee that problem because the new developments will slow soon as interest rates approach normal levels and construction costs continue to rise.

“A lot of these deals are being done because there’s cheap money out there, on both the equity side and the lending side, and I think when interest rates get to normal levels, these deals will not make sense…some of these projects that are in the pipelines probably won’t come to fruition.”

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