Johnson County Construction Boom Helping Area Hotels

By B.A. Morelli, The Gazette

IOWA CITY, Iowa — The influx of out-of-town laborers to tackle millions of dollars of construction work has spurred competition for their business — specifically where they lay their heads at night.

Hotels that cater to longer-term stays as well as those with modest rates seem to be benefiting most directly. But hotel managers across the industry say business has been good all around.

“We noticed a little better January and February than what’s normal, and it’s just continued,” said Debbie Bullion, general manager for the Heartland Inn on Second Street in Coralville. “I think everyone is getting a slice of it.”

Hotel revenue is up in the three major communities in Johnson County, according to information from the Iowa City/Coralville Area Convention and Visitors Bureau:

•In Iowa City, the hotel motel tax revenue is up 14.15 percent from the previous year, for a total annual revenue of $952,393.

•Coralville hotel motel tax revenue is up 4.38 percent, or $2.44 million for the year.

•North Liberty is up 3.35 percent to $63,262.

“I would agree completely. The multitude of construction projects going on is having a positive economic impact for hotels,” said Josh Schamberger, president of the visitors bureau.

The area has had increased occupancy rates month over month since October 2013, and Schamberger points to the pick up of construction work as a reason.

Lead by federally funded flood recovery projects on the University of Iowa campus, there’s nearly $1 billion worth of construction underway, which is unusually busy for the area.

Given the limited market size, many projects have subcontractors from out of state.

Heartland Inn’s Bullion said about one-third of the 169 rooms at Heartland are occupied by construction workers.

Heartland tries to entice workers with the promise of free evening meals and a free continental breakfast, as well as a place to sleep within close reach to many of the construction sites.

“Proximity to the job is a big seller,” she said. “They like to roll out of bed, grab biscuits and gravy and go to job site.”

Curtis Wiederin, general manager of the Best Western Cantebury Inn & Suites on First Avenue in Coralville, is among several managers who go out to job sites to talk to crews. He offers a discounted rate, free breakfast, rooms with refrigerators and microwaves and an indoor pool.

“It is extremely competitive because of the number of hotels in the area,” Wiederin said. “We are ahead of where we were last year, and it’s because of our marketing and customer service efforts.”

Most of the construction clientele will pack a few people into a room, he said. The workers may have a per diem from their company and want to stay within that budget, he said.

Hotels also compete with rental housing for long-term visitors.

Scott Walker has been in the area from Fort Dodge for about a year and will be around until at least December 2015, working as a site safety supervisor at Hancher Auditorium.

He stayed in hotels for about six months, but he grew tired of packing up at the end of the week and settling back in on Monday. Plus, he had to deal with disturbances in the middle of the night, he said.

He turned to Craigslist to find a place to rent, but he didn’t find many options. It took three months before he finally found a condo, he recalled.

“The hotels are competing for people, but I’m at the point in my life, where I’d rather pay more to stay somewhere nice,” Walker said.

The hotels are seeing two kinds of construction-worker guests. The more common is workers who come for a week at a time, and go home on the weekend. The second stays continuously for three months, six or maybe a year or more.

Bullion said negotiated rates of 10 to 20 percent off regular prices are a fairly common contractor discount for the hotel industry. The amount of the discount is often based on the number of rooms and the number of nights.

“We base ours on length of stay. We just agree upon a rate, and any time someone from the company comes in, they get the agreed upon rate,” she said.

Even hotels that haven’t courted the construction crowd are taking on extra business from overflow.

“Because the construction business is filling up so much of the hotel occupancies, it compresses to all of the other hotels in the area,” said Matt Traetow, the director of operations to Sagacity Hotel Group, which owns the Comfort Suites and Homewood Suites.

Traetow said they are actively marketing the Comfort Suites for construction, but Homewood also is seeing increases even though they cater to a different clientele.

“There’s just so many projects in town, it’s really helping the hospitality community,” he said.

Some of the biggest projects, such as the UI Children’s Hospital and Hancher Auditorium, aren’t due to be complete until 2016, so hoteliers are expecting the good times to roll for another couple of years.

“There’s a bit of an uptick right now with all the million of dollars of projects going on, and we think it will be that way for the next couple years,” Bullion said.

l Comments: (319) 339-3177; brian.morelli@sourcemedia.net

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