Healthy Occupancies Spur Hotel Development In Phoenix

<H1> Healthy Occupancies Spur Hotel Development In Phoenix</H1>By Maria Lenhart

<B>H</B>otel and resort development in the Valley of the Sun, dormant for nearly a decade, is back in action once again with new projects ranging from small, secluded properties to full destination resorts.

Healthy occupancies and rising room rates appear to be reawakening interest in hotel development in the Phoenix area, where the last major resort to open was the $300 million Phoenician in 1988.

According to Smith Travel Research, a company that tracks hotel trends, occupancies in Phoenix averaged over 80 percent from January through May 1996. Room rates have risen sharply in the past year, averaging $111.35 during the first five months of 1996, compared with $100.02 during the same period last year.

"We're proving to be a year-round destination, which many people might not have believed possible," said Phoenix hotel industry consultant Rich Warnick, managing director of Warnick & Co. While most hotel development plans for Phoenix are still speculative, the area is getting two new properties this year, both of which are opening on the sites of older hotels.

One of these properties, the 120-room Royal Palms, will open in November on Camelback Road in Phoenix on the grounds of a 1926 estate, the site of an earlier hotel. With the lobby and reception area located in the original mansion, the resort will offer accommodations in individual Southwest-style casitas and outdoor amenities such as a pool area and croquet lawn. The hotel will offer a business center and 10,000 square feet of meeting space, including boardrooms, a library, private dining room and two small ballrooms.

While rack rates are expected to start at $300 during the high winter season, Kelly said introductory rates of $195 would be available during the first weeks of operation.

Another hotel, the Carefree Inn, reopened in late August under new ownership after being closed down for nine years. Located on 20 acres of high Sonoran desert north of Scottsdale in Carefree, the hotel, which underwent an expansion and total renovation, caters primarily to conferences and executive retreats, according to director of sales and marketing Rhonda Hall.

Amenities include 12,000 square feet of meeting space, an executive business center and outdoor venues such as a desert botanical garden and Western cookout area. Rack rates for the hotel will start at $185 from January through May, dropping down to as low as $75 from June through September.

Several large hotel development projects also are in the offing for the Valley of the Sun. The Orlando, Fla.-based Peabody Hotel Group is expected to break ground next spring on a 900-room hotel in Tempe. The property will include 100,000 square feet of meeting space, a large retail shopping area, three restaurants and an 18-hole golf course.

Another new property will be Grayhawk Lodge and Villas, a 250-room lodge-style resort scheduled to open late next year at Grayhawk, a 1,600-acre master-planned community in Scottsdale. The lodge will be located adjacent to Grayhawk's Raptor Golf Course.

One project being proposed is a third convention hotel for downtown Phoenix, long considered a necessity for the city to fully utilize its convention center. "Lately we've been hearing about development interest in a new downtown hotel, so something may happen on this soon," said Tony Alba, spokesman for the Phoenix & Valley of the Sun Convention & Visitors Bureau.