More than 4,500 new rooms are in the construction and permitting phase and another 1,200 rooms are still on the drawing boards, awaiting improved market conditions. Occupancy is at 60%, down from 64.6% in November 1999, according to Tennessee-based Smith Travel Research.

Owners of new assets fear a rate war by struggling properties which might start cutting rates to survive, notes Melvin Tennant, Charlotte Convention & Visitors Bureau president, in a published report. Tennant criticizes developers for not consulting the bureau on market conditions before starting new projects.

That position bothers Greg Panos, head of Panos Hotel Group, who says in a published report the bureau is not effectively marketing and promoting Charlotte. Bureau statistics bear out Panos. The booking of overnight rooms peaked in fiscal 1997 at 344,000. That number compares with 219,000 bookings for fiscal 2000, which ended in June.

The convention and visitors bureau receives about $5.4 million a year from the city's share of the 6% hotel occupancy tax and 1% from the prepared food and beverage tax. The bureau spends about 30% of its $6 million budget on marketing the city as a tourist destination and marketing the convention center.

The city's 10% jump in hotel rooms surpassed major centers such as Philadelphia (8.5%), Seattle (7.6%) and Phoenix (6.4%). One of the standard measures of financial health, the average daily room rate, rose slightly to $68.64 in November from $68.02 a year ago in Charlotte. Revenue per available room is up 6.4%, according to industry experts.

National lodging developers have been attracted to Charlotte's booming economy. There has even been substantial growth in the limited-service hotel segment along interstates and heavily developed commercial areas throughout the Charlotte region.

David Rijos, general manager of the 365-room Omni Charlotte, a full-service Uptown hotel, suggests in a published report that these limited-service operations are what have affected the market the most. Instead of generating a lot of new demand, they take advantage of what's already there, he says.

Instant Insights /

Hotel Room Count Soars by 10% to 26,500 as Owners of New Assets Fear Rate War

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