CAMPBELL - Despite the downturn walloping the hospitality industry, a hotel 10 years in the making is on track to open in Campbell in December. Huntington Hotel Group is well aware of the industry’s double digit declines in occupancy and room revenue, but the Irving, Texas, developer still plans to open its seven story, 162room Marriott Courtyard on Creekside Way near the Hamilton Avenue exit of Highway 17. “We’ve been through the ’90s and 9/11 – we’ll get through this one,” said Mike Siegel, vice president of Huntington’s operations.
This wasn’t the plan or the prognosis when Huntington purchased the 3.5acre site from Peter Pau’s Sand Hill Property Co. in July. Hospitality was a favored sector for commercial real estate investors, but that was before the calamitous economic events in September.
“At the time, San Jose occupancy and its business climate looked like it was coming along well,” Siegel said. “We thought it was time for a new product on the market.”
Campbell city officials had selected the site for a hotel in the late 1990s.
Kirk Heinrichs, Campbell’s redevelopment manager, called the parcel near the Pruneyard office towers, downtown Campbell and the Hamilton Avenue light rail stop a “great location.”
The hotel, valued at $37 million in 2008, was expected to bring the city $500,000 a year from the 10 percent transient occupancy tax, Heinrichs said, but expectations have been scaled back.
Siegel noted the primary element that attracted his firm to the site hasn’t changed. Huntington’s strategy is to develop hotels in markets with high barriers to entry, meaning it takes years, not months, to obtain approvals to build.
“We’ll take the time to work with a difficult real estate deal,” he said, adding “We felt very lucky to pick this up from Peter Pau.”
Given what he knows now about the market, Siegel said he would have waited before buying. But time is money, he said, so Huntington will finish construction.
Tom Callahan, CEO of PKF Consulting, a hospitality industry adviser, knows the site because his firm had worked with Pau to develop it. He said Huntington, a small but well-regarded developer, is smart to finish the hotel.
Article Originally Published by: San Jose – Business Journal
