Sacramento airport now may get not one, but two hotels

Published: Tuesday, Nov. 8, 2011 - 12:00 am | Page 1B
Last Modified: Tuesday, Nov. 8, 2011 - 7:02 am

Sacramento International Airport might get that shiny new hotel after all – maybe even two of them.

One month after the new $1 billion Terminal B opened to a warm public reception, airport officials have formally revived their efforts to get a new hotel built.

They're aiming high.

In a request for proposals released last week, Sacramento County officials invited developers to submit bids on a 3 1/2-star airport hotel with at least 200 rooms. As an alternative, developers could build two hotels of at least 130 rooms each, for a total of 260 rooms.

The county wants the private sector to put up the money. However, experts said they'd be surprised if a developer would jump in without public subsidies.

Airport officials envision a project with more rooms than the 185-room Westin hotel, which was to be built at Terminal B but was canceled. It's bigger than the old 89-room Host Airport Hotel, which closed in 2008.

The new plan "seems a little aggressive," said Garrick Brown, who follows the area's commercial real estate market for Cassidy Turley BT Commercial brokerage.

Dan Hayward, managing director of the hotel division at Colliers International brokerage in Sacramento, said he doubts the project would become feasible until 2014. He noted that air traffic to Sacramento remains in a slump, as does the region's lodging industry.

He added that financing for new hotels is "very challenging."

Airport officials, though, said they believe they can pull it off.

"The County Airport System has conducted an informal exploratory study for the past year and representatives from the hotel industry have indicated that there is interest in this project," said airport spokeswoman Karen Doron in an email.

Steve Hammond, head of the Sacramento Convention and Visitors Bureau, said the project seems realistic. A 200-room hotel is "fairly modest in size," and the market in Sacramento is showing signs of improvement, he said.

The county expects to pick a developer next spring and have the project built within 18 months of signing an agreement, she said.

The Westin was supposed to be the crowning achievement of Terminal B – literally. The $78 million hotel was going to be be built atop the new terminal.

But the recession hurt air traffic, and the Board of Supervisors scuttled the hotel after revenue forecasts suggested it wouldn't break even until 2036.

What's different now is that county officials believe a hotel can be built for less money than the Westin project. Because it would be built at ground level, not atop the terminal, "the costs will be lower," Doron said.

The Westin was going to be built by the county and managed by a private vendor.

Yet while the county wasn't willing to take the financial risk on a hotel, it believes private developers are up for the challenge. The request for proposals says the county doesn't expect to provide any public subsidies.

Any bid that includes subsidies "will be weighted less favorably," the document says.

Hotel development and public subsidies often go hand in hand in the Sacramento area, particularly downtown. A private hotel consultant said an airport hotel would likely require subsidies as well.

"None of this will be a totally private deal," said the consultant, who insisted on anonymity because he might be hired by a bidder to analyze the project. "Sacramento isn't one of the better hotel markets in the United States."

The county has sketched out two possible locations on the airport grounds. One is north of the new Terminal B. The other is west of Terminal A, adjacent to the parking garage.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Dale Kasler



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