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Hotel developers see gold in Marlborough

WORCESTER BUSINESS JOURNAL – The movement of major businesses like Boston Scientific and Quest Diagnostics into Marlborough, as well as the popularity of the New England Sports Center, have developers looking at the city as a smart place to run or build a hotel.

The Best Western Royal Plaza, on the westbound side of Route 20, is the largest hotel in Marlborough, with 431 rooms, nearly 30% of all hotel rooms in the city. PHOTO/RICK SAIA

Mark Zettl, COO of Chicago-based Ultima Hospitality, said the Boston market is one of the strongest in the country and that strength is expanding west from the city. After owning the Sheraton Framingham Hotel & Conference Center for about two years, Ultima purchased the Boston Marlborough Courtyard by Marriott for $23.9 million in July after the previous owner, a Pittsburgh-based investment firm, completed renovations.

Zettl said the decision to expand his company’s footprint into Marlborough came mostly from its knowledge of the market, the hotel’s position as the only “full service” hotel for miles, (that is, having a restaurant) and a diverse market that serves business travelers during the week and athletes and families on weekends.

Zettl and others in the hotel industry point to the proximity of the New England Sports Center, as well as international businesses like Bose and TJX in neighboring Framingham, and the movement of Boston Scientific and Quest as contributing factors in the diversity of the Marlborough market, which they expect will continue to grow.

Backing up that claim is the Marlborough Economic Development Corp. (MEDC), which announced earlier this year that the city’s hotel room revenues jumped 23.5 percent between 2010 and 2012, to $32.8 million. The MEDC also said the city generated $1.9 million in hotel rooms tax revenue in 2012, up from $1.3 million in 2011.

Matt Senie, general manager of development company Riverbridge North, is jumping to make the most of that growth. His firm announced last month that it plans to build a 109-room extended-stay hotel, Homewood Suites by Hilton, at Riverbridge’se mixed-use development adjacent to Solomon Pond Mall. It will accompany a gas station and day care center that are already part of the development, which is just now picking up speed as the economy recovers. Riverbridge has owned the property since 2010 and received Planning Board approval then for the development, which includes apartments and senior housing. But Senie said now is the time to develop, with partner Roedel Cos. of New Hampshire.

5-Year Projections ‘Strong’

“If you believe all the studies, it’s a tremendous opportunity and the hotel should get occupied to kind of normal standards very quickly in the marketplace,” Senie said. “Hotel rooms are in high demand in the area and the projected usage for the next five years is very, very strong.”

Senie said his company did two market studies of the Marlborough-Berlin area and determined that an extended-stay hotel fit the need. He said market studies showed the average stay at Homewood would be three-and-a-half nights, with business travelers occupying rooms Sunday through Thursday, while families and people associated with hockey would be checking in for the weekends. (His hotel would be the second-closest to the sports center, after Residence Inn, located across the street from the center).

Yet, while everyone agrees the market is strong in Marlborough, opinions are mixed as to whether a new hotel is needed.

Donna McCabe, president of the Central Massachusetts Visitors and Convention Bureau, said she believes more hotels are necessary in the Great Worcester area, particularly to benefit Worcester as it tries to woo major events to the DCU Center that require thousands of hotel rooms within 20 miles of the city.

“If you look at the economic development in Central Massachusetts, and Worcester notably, then all of that would fall in line with the need for hotels,” she said.

Despite his enthusiasm for the region —his company is under contract for two more properties west of Boston — Zettl said it’s too soon in Marlborough’s current upward trajectory to tell whether a new hotel makes sense.

“It’s got a great, strong market, but I don’t know if it’s actually strong enough to build a new hotel in Marlborough,” he said, citing difficult lending conditions and high construction costs.

The city has eight hotels within its 22 square miles, which Susan Nicholl, executive director of the MetroWest Visitors Bureau, said is the highest concentration of hotels in any one Bay State community other than Boston.

She said she hasn’t heard that space at hotels has been an issue, but said the addition of a hotel to the city would be seen as a challenge for the visitors bureau because it would have to attract visitors to more hotels.

Nicholl is optimistic that the efforts of her organization, the Marlborough mayor’s office and MEDC will help bring conventions and new businesses to the area, increasing further the need for more hotel rooms.

“The fact that another hotel is looking at being in Marlborough, that’s just kind of an endorsement that it’s a happening spot,” she said.

This story originally appeared here.