Coralville builds on ‘Hub of Hospitality’ name

CORALVILLE — By summer's end, Coralville will have three new hotels — and nearly 300 more rooms — added to its lodging stock.

Ground has broken on a 102-room Springhill Suites Hotel on the corner of 25th Avenue and 10th Street. The Coralville City Council also has given approval to site plans for a 92-room Fairfield Hotel by Marriott and 102-room Hilton Home 2 extended stay hotel — both to be located southwest of the Coral Ridge Mall, near Highway 6.

Next March, construction will begin in the Iowa River Landing on a 186-room Drury Inn & Suites hotel. A Staybridge Suites also is planned for that area.

All told, Coralville looks to add about 550 rooms to its hotel stock over the next few years. Add Iowa City's 143-room, 12-story Hilton Garden Inn, slated to open next year, and the local hotel market is poised for a 700-room increase.

That's a nearly 27 percent increase to the current 2,579 rooms in Coralville, Iowa City and North Liberty.

'In the 19 years I've been working in the Corridor, there's never been close to the hotel development that I've been seeing in the last year, it's pretty remarkable,' said Josh Schamberger, president of the Iowa City/Coralville Area Convention and Visitors Bureau. 'It's also a little scary.'

Schamberger said the fear is too many hotels could oversaturate the market, but he noted that most developers with upcoming projects are local and familiar with the area and the demand.

The local market has been strong and getting stronger, he added.

'That's the thing that's so attractive about this market ...

It's been strong for 10, 15, 20 years,' Schamberger said. 'It grows annually by an average of 3.5 to 4 percent occupancy.'

According to CVB data, area hotels averaged just under 62 percent occupancy in fiscal year 2013. Estimates for fiscal year 2016, which ends June 30, show an average occupancy rate higher than 66 percent.

In the same time span, the average daily rate for a room increased from about $89 to nearly $96.

'The bottom line is the market continues to grow,' Schamberger said.

Meanwhile, a few of Coralville's older hotels have closed. Capri Motor Lodge shut down last summer, a Kum & Go gas station recently opened where a Days Inn once sat and the Big Ten Inn closed just weeks ago.

Coralville Mayor John Lundell said turnover in the hospitality industry is not only expected, it's healthy.

'I think they all have a life expectancy, and the ones that have gone — the Days Inn, the Big Ten Inn — those are a few buildings that had a great life, but they're nowhere near the standards that people expect today in a hotel room,' he said.

Kelly Hayworth, Coralville city administrator, said adding new hotels only further establishes the city's hospitality moniker.

'From our standpoint, it's been a long tradition and a major part of our economy for many many years,' he said. 'Back in the '50s and '60s, the city's model was the Hub of Hospitality ...

This just continues that and supports that part of our economy.'

In addition to bringing customers to local businesses and restaurants, hotels also affect community amenities through the Local Transient Guest Tax, commonly known as the hotel/motel tax. The 7 percent tax is levied on a hotel, motel or other sleeping rooms for rent to guests.

The tax revenue locally is split among several local agencies, including police protection, parks and recreation operations and the Iowa City/Coralville Area Convention and Visitors Bureau.

In fiscal year 2011, Coralville hotels generated more than $2 million in hotel/motel tax revenue — nearly triple the approximately $800,000 generated in Iowa City and North Liberty.

That number is estimated to reach more than $2.7 million in Coralville's lodging tax revenue for this fiscal year, which still is more than double the $1.1 million estimated to come from Iowa City and North Liberty hotels.

Schamberger said a strong stock of hotels is a key component to bring conferences, conventions and major events — last weekend Iowa City hosted the USA Wrestling Olympic Team Trials — to the area.

Schamberger said he didn't have data on this year's trials, but said he expects the turnout and local impact to be comparable to the 2012 wrestling trials, which nearly 12,000 fans from outside Johnson County attended. The projected economic impact of the 2012 event was $5.6 million.

Schamberger added that, along with a financial investment from the community, hotel room availability is a key component when organizations search for suitable locations for events. Without the rooms, certain events are nearly impossible to attract to the area, he said.

Even with Johnson County's more than 20 hotels, Schamberger said demand for rooms during big events is too much for the more than 2,400 rooms available.

'For something of that level, I'm selling Cedar Rapids just as hard as I'm selling Iowa City/Coralville,' he said. 'For the past two weeks we've been in such an oversold state here in Iowa City/Coralville as it relates to hotel rooms, that we were pushing hundreds of people into the Cedar Rapids market and filling hundreds of hotel rooms up there.'