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The Record
Tamsin McMahon
Thursday, July 12, 2007

Business leaders argue the city has been 'losing out' by not having a major hotel. The new BarrelYards development plan proposes a 280-room solution to the problem

After years of false starts, Waterloo's downtown finally seems poised to host a high-end hotel that local businesses say is badly needed.

City hall last month approved the $250-million BarrelYards project on the former Canbar lands, proposed by London-based Auburn Developments.

Along with several upscale highrise apartment buildings and condos, retail and office space, the developer is proposing to include a 280-room, executive-style hotel complex.

Auburn president Jamie Crich is compiling a short list of potential hotel operators and expects to ask for detailed proposals and then negotiate a deal, said project consultant Chris Pidgeon of GSP Group.

The developer hopes to begin construction in the fall and would likely start with one of two 21-storey apartment buildings along Father David Bauer Drive, Pidgeon said. Construction on the hotel could be underway by next spring.

Auburn officials met with local businesses, who sent a message they need a hotel with conference facilities and space for smaller meetings, Pidgeon said. Interested hotel chains have been conducting their own market research in Waterloo and have heard the same message.

"Ultimately, it's up to the hotel operator to determine for themselves the financial viability," he said. "But the expectation is -- and everything we've heard in meetings with the business community -- is that there is definitely a need for more meeting space and conference facilities of varying sizes."

Downtown Waterloo needs a world-class hotel with accommodations suited to senior executives, said Greg Secord of Open Text, one of the region's largest high-tech employers.

"A four or five star, brand-name hotel with conference facilities would be a fabulous addition to the region," he said.

The software developer often meets with Fortune 500 company customers and investors and it's not unusual for those executives to stay at a hotel near Toronto's Pearson airport and commute to Waterloo for meetings, Secord said.

Not all agree more rooms are urgently needed.

The region has about 1,500 hotel rooms, said Brenda Grimm of Kitchener-Waterloo Tourism.

The average occupancy rate is around 65 per cent over the year, still below pre-2001 levels, she said.

But with development growing across the region, there's a growing need for more business-style accommodations, said Iain Klugman of Communitech, the association representing the region's high-tech industry.

"There's a need for more than one or two hotels in the area and having one in uptown Waterloo has been on hold for quite awhile," he said. "If we wanted to run a huge conference, we literally don't have the rooms."

When companies like Home Hardware hold annual conventions, it stretches the city's accommodations to the limits, he said.

Often visiting customers will stay at the Waterloo Inn or Langdon Hall in Cambridge. Others drive to and from places like Mississauga instead of staying in Waterloo.

All this means they're likely not shopping or dining in downtown Waterloo.

"People are kind of scattered all over the place," Klugman said. "We're losing out on people by not having them downtown."

Waterloo's central core has been the focus of at least two failed hotel plans in the past decade centred on the former Seagrams lands at Caroline and Erb streets.

The city has announced plans to hand over 3.5 acres of that site, across the road from the BarrelYards project, to the Balsillie School of International Affairs. The new $7.8-million building will be built beside the Centre for International Governance Innovation.

Proponents of the BarrelYards project say an upscale hotel and major conference facilities have the potential to capitalize on new markets and bring larger events to the region that often end up in places like London, Hamilton or Toronto.

"You look at things like winning the intelligent community award, you look at some of the businesses that are world leaders here in town, it would be really nice to showcase our community to the world and nationally," said Tim Jackson of Tech Capital Partners.

Traditionally, convention centres are owned by municipalities or built with public-private partnerships, which has made it difficult to inspire businesses to invest in such facilities on prime downtown land.

"It's subsidized space and so that's why private-sector people are concerned about putting up projects because they're competing with public dollars," said Larry Martin, director of hotel operations at Best Western St. Jacobs Country Inn, which also runs the Destination Inn.

The region's hospitality sector has been hampered by a patchwork of local governments which have traditionally organized their own tourism marketing, said Todd Letts of the local Chamber of Commerce.

But local municipalities have announced plans to start a joint-tourism marketing agency and attracting conventions will be one of its major focuses, Letts said.

"We'll be constrained by the lack of facilities," he said. "We'll be constrained in attracting certain sized association because of the lack of facilities."

But hotel operators said that while the region's hospitality market has been strong, there has actually been a recent boom in hotel construction that is opening up hundreds of new hotel rooms.

Projects either newly opened or in the works include a 50-room expansion of Destination Inn near Conestoga Mall in Waterloo, construction of 100-room Holiday Inn, 108-room Hilton hotel and 138-room Future Inns in Cambridge, and 82-room Hampton Inn in Kitchener.

That doesn't include neighbouring hotel projects in Woolwich Township and Guelph.

"If you actually added up all the hotels opening in the next two years, you'd be surprised," said Jonathan Lund, general manager of the Holiday Inn, Kitchener.

"It's probably double what it was three years ago," he said. The question is, he said, is the market is going to double?

Lund's hotel, on Fairway Road South at King Street East, recently added conference space that can seat 400 people.

Without major conference facilities to cater to a new clientele, the region's hotel market doesn't seem poised to support such a large development in Waterloo, said Best Western's Larry Martin.

"There's probably opportunity for a boutique hotel, but when you get into numbers of 280, from my perspective, that's too large," he said.

The Uptown Waterloo Business Improvement Area would like to see hotel and conference centre in the city core, but something on a small scale, said executive director Patti Brooks.

"A conference centre is absolutely something we could use in uptown Waterloo," she said.

"I think people find they are more than hard-pressed to seat 75 to 100 people to a conference type setting."

The association holds an annual general meeting in November that can attract as many as 100 people to dinner. They usually try to hold it somewhere in the city core and it's sometimes a challenge for local restaurants to find space.

"We've been lucky thus far having been able to do that, but Waterloo is growing by leaps and bounds."