Home Hotel management XNA Seeks Hotel Developer, Closing Rate Gap

XNA Seeks Hotel Developer, Closing Rate Gap


HIGHFILL — Officials at Northwest Arkansas National Airport are awaiting proposals from developers to build a hotel on airport property.

Officials were told on Wednesday that a request for proposals had been issued earlier this month and responses were expected on Oct. 21. A developer could be selected as early as November. Potential developers have been invited to a meeting at the airport this week if they have any questions or need more information and to view the site.

The preferred site would be just southwest of the parking garage.

“It’s an area of ​​the parking lot, basically, that probably won’t be used for anything else,” airport CEO Aaron Burkes said. “It’s the last place our customers go to park because it’s a bit out of the way. It’s kind of a low-cost opportunity zone, which is part of why we settled in this place.”

Officials believe a hotel would have 100 to 120 rooms, a restaurant and meeting space, and direct access to the airport terminal. Airport parking would be used.

A developer would build the hotel and in exchange receive a long-term lease of up to 49 years, Burkes said.

The target audience for a hotel would be those who leave early or arrive late.

Two Trout, a Fayetteville-based real estate development and consulting firm, is managing the selection process for the airport. The Company focuses on hospitality consulting and project management services. He previously commissioned a feasibility and market study to demonstrate the potential demand for a hotel there.

Carl Kernodle of Two Trout said he wants a national brand that travelers are drawn to.

“Our hope is that by the time you all meet again in December, we’ll be done getting tenders, and we’ll have a business that we’ll be entertaining by then,” Kernodle said. “We think there is a good positive side.”

In Little Rock, the airport commission operating Bill and Hillary Clinton/Adams Field National Airport said in December it had reached an agreement in principle with a Conway hotel development, management and consulting firm to build the first hotel. on its airport property.

“We started planning for a hotel development before the pandemic. Passenger numbers have since seen a strong recovery, which has certainly bolstered demand,” said Shane Carter, director of public affairs and government relations. “This hotel will be very convenient for passengers and extremely desirable for those leaving early in the morning.”

The 88-room hotel would be built under the Hampton Inn & Suites brand on an undeveloped 2.5-acre site at East Roosevelt Road and Grundfest Drive.

“We are currently working with our developer, Conway Management, to secure a date for the grand opening of Hampton Inn,” Carter said.

The agreement consists of a 40-year lease with a 10-year extension. It requires Conway Management to pay at least $54,500 a year in rent for the 2.5 acres and to invest at least $6 million in the project in the first 18 months.

Conway Management operates more than a dozen hotels and one restaurant. They were the only hotel developer to respond to a 2019 request for proposals issued by the airport.

Airport officials said the covid-19 pandemic has put all hotel development on hold, but that is changing.

“Business terms are now at a point where new developments are moving forward,” Greg Garner, airport business and property manager, told the commission’s lease and consultant selection committee in December. .

Planes looking up

Northwest National passenger levels are approaching pre-pandemic levels and could return to 100% by next year, according to Burkes. He expects around 825,000 to 830,000 boardings for this year.

“That’s pretty close to 90% of 2019 pre-pandemic levels,” Burkes said. “I don’t know if we will get there or not, it seems a bit optimistic.”

Airport officials are using 2019 as a baseline because it was the last full year before the pandemic devastated the travel industry.

Burkes said a recession could negatively affect passenger numbers as businesses are likely to tighten their travel belts.

“You go back to the financial crisis of 2008 and the great recession, it took us seven years to get back to the numbers of 2008. It’s a risk, a headwind that we have to be realistic about when we budget for next year. and as we review our growth prospects for the next few years.”

Low-cost carriers are making inroads and increasing their market share at the airport, with 22 to 23 percent of passengers expected for the year, Burkes said. In the past two months, it has been closer to 26%. American Airlines is still in the lead with 46% market share.

“It has a big impact on pricing, it increases competition, and it really helps our market, by getting a little more diversification,” Burkes said.

The average round trip from Northwest National is now about $406, which is about $18 off Northwest National’s peer average of $388. A few years ago, this figure was about $120 above the peer average. That’s cheaper than Springfield, Mo., at $417, but higher than Tulsa, Okla., where the average round trip is around $358.

“We closed that gap,” Burkes said. “We save tens and tens of millions of dollars for our passengers every year with the advancements.”

Burkes said Northwest National will likely always be a bit higher than other airports, as the high volume of business travel keeps airfares higher. Airlines generally charge more in markets dominated by business travel.

Business travelers pay more due to their needs. According to airport officials, they tend to buy tickets at shorter times and travel during peak periods. They are also willing to pay more because they are traveling to earn money, not to spend money, and can accept a higher cost which gives them options to be more flexible.