Editor’s Note: This column has been updated from a previously published version to reflect the actions of the Metro Council on July 22.
On July 22, the Metro Council dealt a potentially fatal blow to the plans of South Carolina development firm Windsor Aughtry to develop a 146-room Courtyard Marriott hotel downtown, when it rejected the creation of a special taxing district to help finance the project.
Just a few months ago, the proposed Tax Increment Financing district for the Courtyard Marriott would have sailed through the Council. Why the developer’s attorneys didn’t push for the TIF back then, when the project had the momentum, is a good question for another day.
But they didn’t, and in the months since, a couple of significant things happened in the downtown hotel market. For one, at the time of their announcement last fall, Windsor Aughtry had what appeared to be the upper hand in a race with local developer Mike Wampold to put a Marriott on Third Street. Both developers had been vying for a Courtyard franchise—Windsor Aughtry for its vacant parking lot, Wampold for his historic LNB Building one block away. Windsor Aughtry was the winner.
Since then, however, Wampold has turned the tables on his out-of-state competition, snagging from Marriott a prestigious Autograph flag, which is a more upscale brand in the Marriott family. His hotel will be full service, compared to the limited-service Courtyard, with a restaurant, a swanky name—The Watermark, and architectural amenities that are unique to the 1920s-era building. It will also be competitively priced, even while billing itself as an “upper upscale” hotel, which means frequent travelers with accumulated Marriott Rewards points will likely be tempted to book at the trendy, chic Autograph over the Courtyard.
What has also changed in the market since last fall is the total number of downtown hotel rooms. When the Courtyard was announced, it was touted as the hotel that would bring downtown to the coveted 1000-room threshold, which will supposedly enable the city to attract all sorts of new convention business.
But a new downtown Holiday Inn Express opened earlier this month, adding 88 rooms to the market, and work has already begun on Wampold’s148-room Watermark. Together, they’ll give downtown more than 1,000 rooms—and that’s not counting the Courtyard.
Even Windsor Aughtry principal Bo Aughtry concedes this market isn’t ready for that many rooms yet. In an email to Wampold that somehow found its way to the inboxes of several Council members, Aughtry asks Wampold to delay his project, saying, “I believe we will all be damaged with added room supply in a market that already suffers.”
The email goes on to note that “the downtown Baton Rouge market remains quite soft … Nobody in this sub market will finish at 70% (occupancy) this year. … It is simply a very difficult lodging environment.”
Aughtry did not return calls seeking comment on the missive. But the email speaks for itself, and had a chilling effect on support for the TIF—which the developers have said is critical if the project is to move forward. The Council was originally to have considered the measure on June 24. But the meeting was adjourned before the matter came up because too few council members were present to make up a quorum. Sources familiar with the situation, however, say even if there had been a quorum the votes for the TIF weren’t there.
In the month between that meeting and the one on July 22, supporters of the Courtyard project met behind the scenes with Council members, trying to help them see the need for passing the TIF. It was a hard sell in the face of Aughtry’s own observations about the market being soft.
As to just how soft the market is, figures for the first six months of the year from Smith Travel Research suggest that overall it’s relatively flat. Occupancy is holding steady at almost 66%, unchanged from 2014 and up slightly from 2013. Room rates are up slightly—about $86 per night, compared to $84 in 2014 and $83 in 2013. The REVPAR, or revenue per available room—the metric used in the industry to measure a market’s economic health— is also up, though barely, to $56.50.
But industry experts say a REVPAR in the mid $50s isn’t terribly encouraging. A healthy REVPAR is in the $70 range. New Orleans, as a point of comparison, has an average REVPAR of $144.
Granted, comparing the Baton Rouge and New Orleans hotel markets is comparing apples and oranges, and the performance of the Baton Rouge hotel market is on par with that of peer cities, according to data from STR. But Council members raised a valid point when they questioned the need for yet another downtown hotel—especially one that would come at the expense of existing establishments and be financed, in part, by public dollars.
It is too soon to say for sure whether the Courtyard is dead, but Windsor Aughtry doesn’t sound optimistic about the likelihood of its moving forward. Says the developer: “Without the Council’s support, the likelihood of the project remains in doubt.”
