Market for hotel rooms warming in Newport County

STAY A WHILE: The principals of Northeast Collaborative Architects want to expand and convert their historic office building into an extended-stay hotel called Exchange Hotel. / COURTESY NORTHEAST COLLABORATIVE
STAY A WHILE: The principals of Northeast Collaborative Architects want to expand and convert their historic office building into an extended-stay hotel called Exchange Hotel. / COURTESY NORTHEAST COLLABORATIVE

In Middletown, the owners of Atlantic Beach Hospitality Group have resurrected plans suspended during the recession to replace the Knights Inn motel on Aquidneck Avenue with a higher-end, 198-room hotel.
In Newport, the principals of Northeast Collaborative Architects want to expand and convert their historic office building on Washington Square into a 30-unit, extended-stay hotel with conference room and roof deck.
And across the Sakonnet Passage in Tiverton, Carpionato Group intends to include a hotel in its $100 million, 18-building Tiverton Crossing project now going through local permitting.
After some slow years, the market for new hotel rooms in Newport County appears to be warming.
Evan Smith, president and CEO of Discover Newport, said in addition to the projects made public, more are being quietly explored by developers and hospitality businesses as the economy picks up.
While Middletown has seen the most new lodging construction in recent years, Smith said Tiverton and Little Compton could have the most untapped demand now.
“We believe the Tiverton project would be great and that the area can support it,” Smith said. “Sakonnet Vineyards is growing and is only going to get more active with events. They are looking for overnight rooms and now there is no place to stay out there.”
While Carpionato’s Tiverton project would be big, something even bigger is potentially looming just across the town and state line in Fall River, where Foxwoods resorts hopes to build a resort casino on the site of the New Harbor Mall.
If Foxwoods’ Fall River bid is chosen by state officials as one of three authorized Massachusetts casinos, it would place a brand new, full-service gambling hall with its own hotel less than a mile from the Rhode Island border and minutes from downtown Newport.
The casino would certainly dim the already uncertain prospects of the Newport Grand slots parlor.
But what impact it would have on area hotels and the rest of the Newport County tourism industry is less clear.
Smith said Discover Newport is “watching Foxwoods,” knowing it will impact Newport Grand, but says concern that a Fall River casino could have a big effect on the rest of the hospitality sector in the area may be overstated. “We were concerned about that 20 years ago when Foxwoods and Mohegan Sun were built in Connecticut, but one thing we learned is folks that are selecting that form of travel are gaming-based travelers,” Smith said. “The [Hyatt Regency Newport], Newport Harbor Group, [Newport Marriott and] Hotel Viking are really marketing to folks that are not necessarily gamers. We didn’t lose market share to Mohegan Sun and Foxwoods as much as people expected.”
Regardless of what happens in Fall River, there are likely more hotel rooms in the region’s future.
Newport’s North End has been the subject of new hotel-development plans for years, including a $1.4 billion proposal from Cranston-based The Procaccianti Group to build a mixed-use complex, including a Ritz-Carlton hotel, around Newport Grand.
That project, called O2 Newport, would have seen Procaccianti buy Newport Grand, but was abandoned in 2007 after the developer failed to reach a deal with state officials on video-slot taxes.
Newport Grand officials have not spoken publicly about the future of the property since city voters rejected a 2012 referendum to expand gaming there, prompting speculation that it could be on the market.
Just north of Newport Grand, the city is eyeing the former Newport Navy Hospital for a waterfront hotel if military transfer and remediation issues can be worked out.
According to Discover Newport, as of February there were 160 lodging properties – including hotels, motels, bed and breakfasts and timeshares – with a total of 3,937 rooms in Newport and Bristol counties.
In the last decade, growth in the sector has focused on boutique properties in Newport and midrange lodgings in Middletown, which now has nearly as many hotel/motel rooms, 1,353, as Newport’s 1,442 rooms.
The most recent new hotel built on Aquidneck Island was Hilton’s Homewood Suites on West Main Road in Middletown, which followed a Marriott Residence Inn on West Main Road. In Newport, the most recent major projects were the redevelopment of 41 North on Thames Street and The Chanler at Cliff Walk on Memorial Boulevard, both in the boutique realm.
Smith said the Newport area’s wide variety of lodgings, including numerous small independent properties, is a major advantage to draw visitors.
However, if there is one thing the area lacks, he said, it is a large, top-tier international hotel and conference center of the kind O2 Newport may have become.
“The one area that I believe Newport’s future growth needs is a large, high-end conference hotel a notch or two higher than the Marriot and Hyatt,” Smith said. “We have depth in so many segments of the industry, but there are meeting planners who shop all over the world and they are looking for a 250-to-300-room, premium luxury hotel like Ritz-Carlton or Intercontinental that we currently don’t have. We lose conference bids because we don’t have that product.”
The new extended-stay hotel planned for Washington Square won’t fill the need for a large conference hotel, but it’s an example of the kind of boutique hotels that have been popping up in Rhode Island and across the country in recent years.
Northeast Collaborative Architects Principal John Grosvenor, a partner in the Washington Square project as well the existing Pelham Court Hotel, said that unlike the architecture industry, hotel business never truly fell off in Newport in the recession.
“We didn’t have much of a recession,” Grosvenor said. “We didn’t become more profitable like some did, but we were at least flat. I am very optimistic as the economy picks up hotels will be a very powerful engine for Newport.”
The impetus for converting Northeast Collaborative’s offices was the effort to revitalize Washington Square and the feeling that the high-visibility location would do more for the area as a hotel than offices.
Grosvenor’s new hotel project, named the Exchange Hotel after the building’s origin as a turn-of-the-century bank, has conceptual city approval and, if all goes according to plan, could begin construction in the fall.

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