Silicon Valley Resurgence Attracts Corporate Meetings
<H1> Silicon Valley Resurgence Attracts Corporate Meetings</H1>By Maria Lenhart
<B>T</B>he resurging Silicon Valley economy, which is driving local hotel occupancies and room rates upward, also is pushing investment dollars into hotel improvements and a renewed interest in developing new properties catering to corporate groups.
In particular, San Jose's downtown district is becoming a focal point for investment interest.
Earlier this summer, the American General Hospitality Corporation, based in Dallas, announced plans to purchase and upgrade two downtown business hotels, the 327-room Le Baron Hotel and the 231-room Holiday Inn-Park Center Plaza.
According to Russ Valentine, senior vice president of American General Hospitality, the company intends to spend $6.5 million in renovating the guest rooms and public areas of the Le Baron, which will become a Doubletree Hotel by early next year.
Plans for the Holiday Inn include a $4.7 million upgrade this fall, after which the hotel will be repositioned as a Crowne Plaza, Holiday Inn's most upscale brand classification.
City officials also are keen on developing a new downtown four-star property in the 350-400 room range that would cater to both individual business travelers and convention delegates, according to Jim Forsburgh, assistant executive director of the San Jose Redevelopment Agency.
"There's been a site next to the convention center which has been earmarked for hotel development for about ten years, but interest in it has been in the deep freeze until recently," he said. "Now with the market getting stronger, we're seeing developers taking a look at it again."
Corey Limbach, vice president of PKF Consulting in San Francisco, a company which tracks trends in the lodging industry, said he is not surprised that hotel developers are looking at downtown, but thinks it might be awhile before anything solid happens.
"From a purely market standpoint, San Jose could easily absorb another hotel-there's definitely enough demand for a new hotel to come on line," he said. "But, given the high cost of new construction and what it takes to get a return on investment these days, developers may want to wait for further growth in room rates to justify it."
They may not have long to wait-the most recent occupancy and rate figures compiled by PKF indicate that San Jose hotel business is enjoying its biggest boom in years.
Occupancy rates during the first five months of 1996 were 81.04 percent, a sharp increase from 75.5 percent during the same period last year.
Room rates for the same period showed an even greater improvement, jumping from $85.07 in 1995 to $96.39 this year.
According to Limbach, another local trend is for downtown San Jose hotels to perform just as well as those in the Santa Clara-Sunnyvale area where most of the Valley's high-tech firms are located. "Hotels in Santa Clara-Sunnyvale used to do much better than those in San Jose, but that gap has all but closed," he said.
San Jose's improving fortunes can be attributed to two main factors: the trend toward more high-tech firms relocating their offices here and an upturn in convention business, according to Leonard Hoops, spokesman for the San Jose Convention & Visitors Bureau.
Silicon Valley companies relocating downtown include Internet provider Netscape and the software manufacturer Adobe Systems. Adobe will move to a new downtown office tower this fall and also may build and occupy another tower next door.
At the same time, the San Jose convention center is booked to near capacity and the city council is expected to authorize a feasibility study on whether the center should be expanded, Hoops said. "That has a lot of implications for infrastructure development-there's no way we can expand the center without building another hotel."
Meanwhile, San Jose already has added new room capacity for the growing corporate conference market. The Hayes Renaissance Conference Center went full-service earlier this year by adding a wing with 135 guest rooms, fitness center and 3,000 square feet of additional meeting space.
Located in a historic 1905 Mediterranean-style mansion, the Hayes Center opened in 1994 to serve upscale conferences with such features as richly paneled meeting rooms with fireplaces and library shelves.
The recent expansion added its first overnight accommodations, including five luxury suites in the mansion itself.
Available for group travel business only, each guest room features a safe, coffee maker, refrigerator, workstation and a hookup for computers and fax machines. In addition, the property's suites include equipment for videoconferencing.
The new meeting space, which now allows the center to handle groups up to 350, is located in a connecting building between the mansion and the guest room wing. The property also features a new health club with workout rooms, sauna and massage facilities, and an outdoor pool.
Although the Hayes Center is managed by the Renaissance Conference Company, which also manages the Renaissance Meeting Center at Techmart in Santa Clara, the former attracts a different category of conferences, according to sales and marketing director Dan Marks.
"We both focus on corporate meetings, but Techmart gets more training sessions and quick-turnaround business than we do," Marks said. "We provide more of a think-tank atmosphere, which is ideal for a company developing a new product or forming a new partnership with a local corporation," he said.
While most of the Hayes Center's corporate clients are from outside the region, Marks said Silicon Valley companies are proving to be an unexpectedly large source of business.
"We hadn't anticipated much local business, but companies in the area are booking a lot of meetings with us, particularly on a short-term basis," he said.
The Hayes Center is offering a Complete Meeting Package Plan for $245 per person, which includes accommodations, meeting space, three meals daily and refreshment breaks.