Hotels Booming in Anchorage

Defying soft lodging market trends in the lower 48 states, Anchorage, Alaska, is expecting to see five new hotels open by 2005.

Taking into account the two new hotels that have opened in Anchorage this year, the Aspen Hotel and a Ramada Inn, the boom will bring a total of 774 new rooms to Anchorage by the end of 2005.

That’s good news for travel agents, who will likely find more rooms available in the summer with lower rates.

“Anchorage has been a very dynamic market, but that’s a lot of rooms to throw at the market all at once,” said Michael Mohn, a consultant with Jinneman, Kennedy & Mohn in Seattle.

“Our read on the market is that performance is expected to soften as a result.” The growth is partly a result of speculation that the city will build a new convention center within the next 10 years, though so far voters have not agreed on how to fund the proposed project, said Karen Rogina, executive vice president of the Alaska Hospitality Alliance.

Also, Anchorage is increasingly becoming a hub for business. The city’s growing transportation industry has created more demand for hotels.

There is also potential for growth in tourism, said Rogina. But tourism across the state has been hurt by Sept. 11 and the economic downturn. And though cruise activity has increased along the Alaskan coast, most cruise lines haven’t brought passengers through Anchorage.

Anchorage’s average hotel occupancy rate last year reached 72 percent, higher than the national average of 59 percent, said Mohn. But the anticipated influx of rooms may drive occupancy rates down in the city.

Hoteliers say they have already seen Anchorage’s notoriously high summer room rates drop as a result.

The average room rate last year in Anchorage was $113 per night, compared with $83 nationally. But room rates in Alaska vary dramatically throughout the season, with summer rates typically more than double off-season rates.

“It used to be you couldn’t get a room in Anchorage in the summer for less than $200. Now it’s more like $150,” said Carol Fraser, vice president of Aspen Hotels of Alaska, which owns five properties throughout the state.

Still, the glut is likely to only hurt the older hotels that lack the “bells and whistles” of the newer properties, said Fraser.

Four of the proposed hotels fall in the mid-price category, with one, an Embassy Suites, expected to compete with upscale properties.

In addition to the new Mediterranean-themed Aspen Hotel, which opened in January, Aspen Hotels of Alaska plans to begin construction this month on a 138-room Aspen Suites property, an extended-stay budget hotel with limited amenities.

The former Westmark Inn on Third was bought last year by Anchorage developers Randy and Susan Kaer, who reopened the hotel as a Ramada Inn in June.

The lobby was remodeled to give the property a “lodge feel,” and rooms have also been upgraded with new bathrooms and new beds. High-speed internet is expected to be available in guestrooms soon, said Susan Kaer, who is also general manager.

The hotel also added a full-service restaurant, the Yukon Yacht Club, as well as a business center, a small workout room, and guest laundry facilities. Stonebridge Companies of Denver last month broke ground on another extended-stay hotel, a Homewood Suites, which is scheduled to open in February 2004. The hotel will offer one- and two-bedroom suites with kitchens.

And Stonebridge has signed an agreement to open an Embassy Suites in midtown Anchorage, though plans are still in preliminary stages, said company spokeswoman Terry Radcliffe.

A&A Construction & Development Inc. plans to build a Motel 6 and a Marriott Fairfield Inn & Suites, both of which are expected to open next year.

The two hotels will be managed by The Hotel Group of Edmonds, Wash. While the Motel 6 will be aimed at budget conscious travelers, the mid-priced Fairfield Inn will feature 106 rooms, a breakfast buffet, an indoor pool, and Marriott amenities such as high-speed internet, said Doug Dreher, The Hotel Group president.

In addition to the new hotels planned, the Inlet Tower Hotel & Suites downtown is undergoing a $5 million renovation, restoring the hotel to its original 1950s retro theme.