Earlier this month hotel developer Bentonville Hospitality Group broke ground on a new 107-room boutique hotel in Bentonville that will be branded as the Element by Westin. It is the first new hotel construction in that city since the 21C opened in 2013.
The project is expected to cost about $10 million with $850,000 of that in land costs. The controlling owner of the project is Shash Goyal the CEO of I Square Management in Little Rock. Goyal purchased the 3.38-acre lot behind the Cracker Barrel, off Interstate 49 in Bentonville in December for $850,000, according to county real estate records. The official address of the project is 3401 Medlin Lane, Bentonville. The construction permit has been approved by the city with work valued at $9.166 million. Goyal confirmed for Talk Business & Politics that the project is costing upwards of $10 million.
Goyal said he’s excited to bring Element to the growing market of Northwest Arkansas. It will be the first Element property in the state, according to the company’s website. He said Element aims to serve a niche market of clients looking for a modern, eco-friendly hotel within a short drive to Crystal Bridges, Walmart AMP and the University of Arkansas. Goyal said the hotel is also designed for the area’s upscale business traveler segment.
Bentonville city officials said the permit has not yet been picked up by the contractor which is General Construction Group of Little Rock. The building’s architect is Chasen B. Garrett Architects of Fort Smith. Funding for the project is being provided by Generations Bank of Bentonville.
‘A GOOD FIT’
Bentonville has about 2,000 rooms which stay occupied Monday through Wednesday, according to Kalene Griffith, CEO of Visit Bentonville. She said a new hotel like Element is welcomed by her team who works to recruit small groups to the city for board retreats and other smaller events. Griffin said the conference meeting space the Element is supposed to have will range between 650 and 1,000 square feet and while that is small, it’s big enough for regional gatherings.
“Element also brings a new brand to the region, one that is eco-friendly and will accommodate families and business travelers who want to stay for several days at a time. Teams that come to the region to participate in national events are often looking for accommodations that are more like home with a living room and kitchen than a typical hotel room,” Griffith said. “We think the Element will be a good fit for them.”
The Element brand is relatively new with just 19 hotels in North America. There are plans for 51 new openings over the next two years, according to Element’s global website. Element by Westin is owned by Starwood Hotels & Resorts which is in the in the midst of being acquired by Marriott International pending regulatory approval.
Goyal, a member of the Arkansas State Parks and Tourism commission, said the vibrant market of Northwest Arkansas is a great entry point for the Element brand in the Natural State. He said his company completed a feasibility study on the area before investing and found that Bentonville’s business travel and expanding weekend traffic made the city the best place to put the new hotel.
“As more international travelers visit Northwest Arkansas, we think they too, will be drawn to the global brand that allows clients to live close to nature,” Goyal said.
The new hotel will be 69,000 square feet and feature studio units and one-bedroom suites and about 1,000 square feet of meeting room space that is equipped with the up-to-date technology and flexible layout. The entire building will be LEED certified, a requirement of the Starwood chain, according to the Element website.
This is Goyal’s first property in Northwest Arkansas. His company’s hotel portfolio includes more than 500 rooms located in Fort Smith, Little Rock, Maumelle and Forrest City. Goyal said he is working out some of the details that will allow hotel patrons to take advantage of the trail system that runs close to the hotel site.
The hotel sector in Northwest Arkansas has had its up and downs, but in 2016 improved business and leisure travel helped keep the region’s 7,901 hotel rooms full about 66.4% of the time through July, according to the latest report generated by STR, a data and analytics specialist for the industry. STR reports that occupancy levels rose 1.4% through July, compared to the same period in 2015. It’s the highest average occupancy rate the region has experienced to date.
Hotel occupancy rates in the second quarter were 70.6% in April, 71.6% in May and 78.4% in June. Each month was an improvement over the year-ago levels of 68.3%, 67.3% and 75.6%, respectively. Sector revenue through July rose to $95.467 million, up 4.4% over a year ago. Over the past two years revenue for the seven-month period has increased more than $17 million.
The average daily room rate also ticked higher through July with the seven-month average rate of $85.91, up from the $4.08 from a year ago.
An important profitability metric for hotels is the revenue earned divided by the number of rooms available which rose to $57.06 through the first seven months of 2016, a gain of 6.5% from the same period in 2015. STR reports the supply of rooms were available an average of 239,034 nights this year through July against an average demand for 158,754 rooms.
Northwest Arkansas has 7,901 hotel rooms, down from its peak of 8,103 rooms as of May 2015, but the new Element Hotel by Westin will add back 107 rooms to the region’s total lodging supply.
Griffith said her team in Bentonville works to recruit events like the International Mountain Biking Global Summit meeting in Bentonville on Nov. 10-11. She said between 500 and 700 biking enthusiasts are expected to attend.
Because of the limited meeting space in Bentonville, she said her team did some out-of-the-box thinking to find ways the meetings could be held in the city’s unique downtown area. She said they have enlisted the help of the Chamber and several businesses who have meeting space like Arvest and Tavola Italian Restaurant as well as the Jefferson House to hold meetings around the square so the summit goers can walk outside from meeting to meeting and experience what fall is like in the Ozarks.
She said most of the out-of-town guests have booked their stay at 21C downtown and there are also a couple of overflow hotels to handle guests if needed.