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City Council, residents optimistic about downtown hotel prospects

Residents and city officials look at a model of downtown Hendersonville during a public meeting about a downtown hotel project.

If the size of the crowd signified the degree of interest, Hendersonville is very interested in the prospect of a hotel on the site of the historic Grey Hosiery Mill.
Eighty people filled most of the seats at the City Operations Center Tuesday night to hear public-private development experts issue an opinion that a downtown hotel is economically feasible — as long as the city participates to some degree in the project. The city’s main contribution would likely be to finance the sale of the mill property at a low rate and to invest money in streetscape improvements that makes for an appealing pedestrian link to Main Street.
The consulting group, Development Finance Initiative, was formed at the School of Government at UNC at Chapel Hill to “respond to development finance challenges (and) bridge that gap between public and private investors for these type of transformational projects,” said Rory Dowling, the project manager for DFI.
After the City Council approved the agreement a year ago, DFI set out to research Hendersonville’s demographics, analyze the demand for lodging and study the potential for growth, said Sarah Odio, a graduate student who was part of the DFI team. The analysis found that while there is no demand for more of the city’s existing inventory of rooms — bed-and-breakfast inns and highway motels — there is a demand for a downtown hotel.
“There is limited high-quality full service products with event space and a restaurant,” Odio said. “Just looking at the model, this is an awesome place and people want to come here.”
The hope of the City Council is that those visitors want to stay downtown and that associations, betrothed couples or anniversary celebrants would  book a convention, wedding or party in the 100-year-old mill on Grove Street at Fourth Avenue East. Plans now envision saving the historic 1915 mill for use as a restaurant and meeting space while clearing the rest for new construction.
The consultants looked at four comparable resort towns — Beaufort, S.C., Staunton, Va., Blowing Rock and New Bern. All have a downtown hotel “in the style you’re looking at as well an event or conference space,” Odio said. “Downtown hotels can demand higher occupancy rates and higher room rates."

In response to a concern that lodging is a zero-sum game — a room night downtown cancels a room night on I-26 — Odio said that’s not the case.
“All the products including highway hotels and bed & breakfasts benefit,” she said, because the downtown hotel brings more visitors overall. Interviews with hoteliers in the four towns DFI studied showed that “across the board they felt the downtown hotel benefited them as a whole.”
The public-private partnership model, in which the city sells the mill property at an attractive rate, would generate more tax revenue and tourism, the consultants said.
“We found that with the public-private partnership there’s actually a net positive return to the city,” Dowling said.
Council members reacted enthusiastically to the presentation. The next step would be to authorize the consultants to draft a request for proposals in an effort to attract responses from boutique hotel developers. The proposal on the table now called for a five-story hotel with 130 rooms, a restaurant and convention space for 200.
“I think it’s the best shot to do something great for downtown and also save an old building,” City Councilman Jeff Miller said.
Mayor pro tem Steve Caraker said he favors authorizing the next step in an effort to recruit a developer.
“They’ve done projects similar to this all over the state so they already have a list of prospects,” he said of the Chapel Hill consultants. “Dealing with an old building is not your normal from-the-ground-up construction. It presents its own list of challenges and surprises.”
Carson Calton, the owner of City Tire and chair of the Historic Seventh Avenue advisory committee, liked what he saw.
“From the perspective of the Seventh Avenue group, we’ve been talking about something like this forever," he said. "This makes perfect sense not only for all of downtown but for our whole district. To have an anchor like this is great. It’s bound to have a spillover effect. Downtown is vibrant and full and they’re going to go to the next commercial area and that’s us.”