Consultant: city should add hotels

Several in pipeline, but Napa can handle more

By KEVIN COURTNEY
Register Staff Writer

A critical mass of higher end hotels, supported by restaurants and stores, is slowly taking shape in downtown Napa, but more are needed, a consultant told the Napa City Council Tuesday.

Although several new hotels are in the offing, the ailing national economy could slow city plans to attract more overnight visitors and the dollars that they spend, HVS International reported.

Napa has 1,635 guest rooms of various types, which is 500 more than in 2000, when the city first hired HVS to analyze the hotel market.

Another 832 hotel rooms are in the planning pipeline, including the 160-room Westin Verasa on McKinstry Street, which is scheduled to open later this year, and the 142-room Avia, which is about to break ground on First Street near City Hall.

Also listed as strong possibilities are the proposed 351-room River House, a Ritz-Carlton property at First Street and Silverado Trail, and the proposed replacement of the 115-room Chateau on Solano Avenue with a 196-room Kimpton hotel.

Over the next seven years the city of Napa should get more hotel rooms than any other Napa Valley jurisdiction, HVS said. “Development constraints” such as traffic and water availability will prevent American Canyon, Yountville, St. Helena and Calistoga from adding a significant number of new rooms, the consultant said.

City staff recommended several new policies to guide hotel development. Housing impact fees, which haven’t changed since 1999, may need to be raised.

New projects should commit to using shuttles and other alternatives to private cars, providing career opportunities for employees and adopting “green” practices, staff said.

Councilman Mark van Gorder said the city should look at the pay practices of new hotels to learn if their employees can afford to live here.

Referring to a recent flap over Meritage Resort’s refusal to allow an abortion rights group to hold a convention, van Gorder said future hotels should commit to renting conference space to all organizations.

Councilman Jim Krider asked if Napa should try to pace new hotel development so as to not create an imbalance between supply and demand. The slumping economy will do this, Sahlins said.

Napa and the Napa Valley may be better off than other parts of the country if there is a drop in hotel construction. “A lot of hotel companies see the prestige of having a hotel here,” she said.

Napa has only a small number of undeveloped sites big enough to handle additional full-service hotels, HVS said. Hotels would draw more customers at off-peak tourism times of the year if the city had more conference facilities, said Elaine Sahlins, a senior vice president.

Cassandra Walker, the city’s economic development manager, said the city would continue to explore the feasibility of using Napa Valley Exposition for conference space.

A conference center could also double as a multi-purpose community facility, the consultant said.

When HVS looked at the hotel market in 2000, it recommended high-end, full-service hotels in downtown, supplemented by less pricey hotels elsewhere in the city.

The city has been implementing that strategy, but at a slower pace than intended. Tourism declined in the early part of this decade following a downturn in the high-tech industry and the chilling effects of the 9/11 terrorist attacks.

The past three years have been good ones for Napa Valley tourism, HVS said. As hotel occupancy rates have rebounded, old projects have been revived and new ones proposed.

With the national economy again in trouble, HVS said another slowdown in new hotels seems likely. “It’s very hard for developers to get financing right now for new hotels,” Sahlins said.

Condominium financing, which is being used for Westin Verasa, was “all the rage,” but the soft real estate market makes it less popular today, she said.

Even if all the proposed hotels in Napa and elsewhere in the Napa Valley were built in the next seven years, there is enough demand for the market to absorb them, HVS said.

The latest HVS report cost $38,500, paid for from downtown redevelopment revenues.

City staff will circulate the HVS report among tourism and business organizations, while studying higher housing impact fees.

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