Hotel construction in the Quad-Cities is booming, with 15 new properties opening in the past nine years. One more will open in downtown Moline this fall, and another new hotel will welcome guests along Davenport's Elmore Avenue next year.
In all, there are now 71 hotels in the Quad-City area, representing 6,488 rooms, according to STR, a firm that collects data on the global hotel industry. Twenty years ago, the region had just 50 hotels. Roughly 60 percent of total rooms are on the Iowa side, and of those 17 new hotels, 13 are in Iowa and four in Illinois.
Surprisingly, new visitors aren't fueling the boom. Data from the local visitor bureau show that about the same number of people visit the area each year. So what's driving all the new hotel construction, and are people really going to fill all these new rooms?
Hospitality experts point to a strong national economy that's fueling growth in the hotel industry across the country. Hotels planned before the recession hit are now feasible. Development loans are easier to obtain. And more people are traveling than ever.
In the Quad-Cities, especially, the growth has been fueled by new brands seeking a market presence. Some of those new chains are hoping for the proposed rail line between here and Chicago to fill some of their rooms. But local leaders say the area's unique location, culture and character make it a prime location for visitors looking for a diverse hotel and travel experience.
"In a community of our size, to be able to have Hotel Blackhawk, the Element Moline, casino hotels like Rhythm City, and the new Hyatt — we've got variety," said Dave Herrell, Visit Quad Cities' president/CEO. "We have unique products which some other markets can't boast, particularly compared to cities like Rockford and Peoria.
"Millennials, Gen Z, the younger demographics, are looking at markets more off the beaten path, looking for experiences," he said. "I think our competitive advantage can be, we're not a major market; our hotel product and inventory is going to be reasonably priced against our competitors, and it's easier to get around."
The area has averaged 1.6 million overnight visitors per year over the past five years, Herrell said. However, visitor expenditures have increased; total Q-C visitor spending reached $882 million last year, he said, up more than $175 million from 2007.
Much of that has to do with tourism-related costs going up over that period. An estimated 3,200 people visit the Q-C from outside the area daily, for business travel, meetings and conventions, sporting events, reunions and more.
"I think there's more to do and offer," Quad-Cities Lodging Association (QCLA) president Felicia Weese said, pointing to bars, restaurants and attractions. "People are willing to spend more. We have newer and different restaurants. People may be more willing to go out on limb, do something special to the Quad-Cities."
But other communities are also enjoying the same advantages leading to the local hotel boom.
“Hotel growth is occurring in most communities across the United States as travel and tourism remains a major and growing industry,” said Joe Taylor, who left as CEO of the local visitor bureau last year after 20 years at the helm to become head of tourism for Evansville, Ind.
In 2018, the U.S. had 947 new hotels (with 112,050 rooms) open, a 2% growth in supply, according to hospitalitynet.org. The total nationwide is now 56,909 hotels and 5.38 million rooms, with the 2019 forecast was 2.2 percent growth with 1,022 hotels and 116,357 rooms expected to open.
“For most holiday weekends, the AAA forecasts record-breaking travel and air travel continues to expand. A partial explanation of today's growth is the rebound that is occurring from the recession of 2008-2009,” Taylor said. “Many plans for new hotels were shelved for several years when the economy drastically slowed, so some current growth is the bounce-back from that compression."
Tourism employs more than 8,000 in Q-C
There are 8,140 people working in the Q-C hospitality industry — including restaurants, bars, and the attractions in the area. And many of those folks are working in hotels built around some of the region's hottest development sites, including the TBK Bank Sports Complex in Bettendorf, the 53rd Street-Elmore Avenue corridor in Davenport, the transit center in downtown Moline, and new music venues and restaurants along the riverfront in East Moline.
“For us, it's deal-driven,” Bettendorf-based Frontier Hospitality Group CEO Dan Huber said of new developments. “Is it a good location? Do we have the availability of a good brand? What are the sources of business? Where is the demand for the product? We always do a feasibility study with each product.”
In early July, Frontier opened the new Home2 Suites by Hilton on the site of the old Lodge hotel in Bettendorf, off I-74 near a cluster of many hotels along Utica Ridge Road. “Any significant source of business is going to find that a convenient location,” Huber said. “The franchisors actually prefer some of the clustering of hotels together, because in the consumer's mind they know, 'Here's where we go to stay.' There's a variety of options.”
More hotels “will keep everybody competitive and we'll just have to get what we can get,” said Felicia Weese, the president of the lodging bureau and manager of Davenport's Holiday Inn & Suites. “I think it's a good thing to be competitive and have more choices out there.”
While the Holiday Inn's Elmore Avenue hotel, which opened in 2014, has seen an average of 75 to 80% occupancy annually, average occupancy is currently 53.5%, according to Visit Quad Cities, with July averages (including the big John Deere Classic and Bix 7 events) about 65 percent, Herrell said, noting the Quad-Cities is below the national average on occupancy.
Like other industries, hotel development is cyclical, said Huber, who also just opened a new Cambria Hotel Bettendorf at the TBK Bank Sports Complex in Bettendorf. After the 2008-09 financial collapse and housing crisis, there was minimal hotel development. “Banks were not lending money for those, but now we're seeing a bit of correction going on,” he said.
What about Airbnb?
Despite explosive growth worldwide, the Airbnb phenomenon doesn't seem to be affecting local hotels much. There are about 20 local listings on airbnb.com at any given time.
“That is something I do think affects bigger markets, bigger cities,” Weese said, where Airbnb has hundreds or thousands of lodging options.
Airbnb, founded in 2008 for people to rent out rooms, apartments or homes for short-term stays, is now the largest online marketplace for lodgings in the world and has 6 million listings across 81,000 cities worldwide.
A new study published in Tourism Management calls it disruptive innovation. While previous research has shown Airbnb negatively impacts lower-end hotels, this study is the first of its kind to provide evidence of Airbnb’s growing impact on the mainstream market across various hotel class segments, according to marketbusinessnews.com.
U.S. consumers spent more on Airbnb last year than they did on Hilton and its brands like DoubleTree and Embassy Suites, according to new data from Second Measure. Airbnb spending is catching up to Marriott, the world’s largest hotel company, which added to its revenue by acquiring Starwood hotels in 2016, and represents about 19 percent of all U.S. lodging sales.
The data show roughly 30 percent growth last year in U.S. consumer spending on Airbnb, which is expected to go public next year and is valued at about $38 billion.
Growth in Bettendorf
The new Cambria, a 112-room hotel just opened by Frontier at the bustling TBK Bank Sports Complex, is emblematic of national hotel growth.
The upscale Cambria is rapidly expanding in major U.S. cities, with more than 40 properties open nationwide and more than 100 hotels planned to be built in the U.S. and Canada.
The TBK Bank Sports Complex opened in May 2018, spanning 76 acres off I-80, at Middle and Forest Grove roads. Retail buildings on-site with several more bars and restaurants have opened in the past 14 months.
Complex owner Doug Kratz approached Frontier Hospitality to build the hotel, Huber said.
“The most exciting part is it's new demand to the market,” Huber said. “It's sports teams and their families who weren't previously coming here. When you have a $60-million complex that is so state-of-the-art and is on such a large scale, and has such capabilities in terms of different types of sports and other events that can be held there, you end up with greater reach in terms of distance people are willing to travel to be there."
Add in ancillary growth with restaurants, bars and other services, and it can create a destination that "is so appealing that it's almost self-fulfilling," Huber said. "You can really create a powerful, new district. … Not only is that great for the sports teams and the families, but it's a very appealing corporate destination."
The Cambria in the Quad-Cities is similar to a Cambria that's near a sports complex in Westfield, Ind., outside Indianapolis, which Huber visited. “It's a beautiful hotel. It's the nicest, highest-end hotel we've done.”
Frontier — which owns Davenport's Best Western Steeplegate Inn and built the Holiday Inn Express at the airport in Moline in 2014 — opened the new Home2 Suites (all suites, upper mid-scale) on the former Lodge site in Bettendorf. A Hilton brand, it's also growing in popularity, Huber said.
“Franchisors are looking for ways to license more hotels, and they try to find market segments as being distinct from one another,” he said, noting new brands are ones to open, since there's a limit to how many of the same brand a city an support.
Suites are attractive to any traveler, not just extended stay, Huber said. “If you can stay in a room for one or two nights, and can have all the advantages of a suite, with a kitchenette, all the amenities, it's a pretty nice option,” he said.
Russell Construction owned the Lodge site and demolished the former Jumer's Castle Lodge in 2016. Company CEO Jim Russell is an investor in most of Frontier's six hotels, including one each in Dubuque and East Peoria, Huber said. “We have a partnership where he invests and his company does the construction."
“It's known as a hotel location; for many years, the Lodge was a successful property,” he said. “Hilton is a great franchisor. Home2 is an emerging, fast-growing brand. People really like it. You're in the I-74 corridor and you're in the dead center of the spine, the economic spine. Over the long haul, you think 'great brand, great location.'”
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According to Hilton, Home2 Suites is one of the fastest-growing brands in the chain's history — now more than 300 hotels, with 447 more in the pipeline.
This type of hotel diversity is key, said Herrell, president of Visit Quad-Cities. "I think the product we have in this market (is) we punch way above our weight class — in terms of quality, authenticity, diversity in the size and scope. On the destination side, I like having diversity in brands. Obviously, there's loyalty with that. There are people traveling all over the world that are connected to certain flags. They know, come hell or high water, that's where I'm going."
Lighting a new Candlewood
Candlewood Suites, off Utica Ridge in Davenport, also all suites on three floors, opened in late May near Homewood Suites (which is part of Hilton), Staybridge Suites (like Candlewood, part of InterContinental Hotels Group, or IHG), and My Place Hotel, which opened last year.
General manager Julie Bray used to work at the biggest hotel in the area, Bettendorf's Isle Casino Hotel. She wonders if the area is nearing hotel saturation. “I'm sure there's that point; someone smarter than me will make that determination,” she said. “I think most hotels have that same hesitance when a new hotel goes up. Prior to being at this hotel, I definitely had that as well. So far, we've done well and it hasn't been a problem for us.”
Candlewood bills itself as “a home away from home, where we do housekeeping every seven days,” Bray said. “You're living here; this is like your house. We have free laundry and baskets to do your laundry. We'll obviously change out towels, and anything like that."
The average length of stay is about six nights, she said, noting this summer has brought more leisure travelers. “Typically, 60 to 70 percent of longer stays are business travelers,” Bray said. “We do a lot with construction workers, people relocating to the area, or doing business for extended stay.”
Coming around The Bend
Ray Stoddard, longtime manager of The Lodge and now general manager of the 8-month-old Hyatt Place/Hyatt House at The Bend in East Moline, said he's concerned about an over-abundance of hotels, but he's been out on his own in the new nine-story digs, filling a specific niche.
“The hotel was built after a lot of conversations with the people at Deere,” Stoddard said; the 233-room Hyatt is 5.7 miles from John Deere World Headquarters and 6.4 miles from the TPC golf course that hosts the John Deere Classic.
The hotel features a mix of traditional hotel rooms with extended-stay suites, partly because that's what the market was telling developers was needed. The fitness center at the hotel is larger than a typical fitness center at a hotel, for example, because “That's what the Deere people said their people were looking for," Stoddard said.
"Then you've got the river. The (top-floor) River Room was full every night during Classic week, every night from Sunday through Saturday night, it was packed. It obviously had its best week in its six, seven-month history.”
After opening last December, suffering a brutal winter and a rain-soaked spring, the $80-million hotel (the second-largest in the Quad-Cities by number of rooms) has flourished, Stoddard said of the 134-room Hyatt Place and 99-room Hyatt House for extended-stay customers.
“During the construction, it was really hard to get people to book rooms, even Deere,” Stoddard said. “They want to see you up and running before they make that commitment. The minute we were taking bookings, they wanted as many rooms as they could.”
“People who have visited, I've heard nothing but positive — that it's so cool to be at a new place," said Mykenzie Roberts, director of events and catering at the neighboring Bend Event Center, which opened in June and also has proven popular. "It's just a different experience than a downtown.”
The John Deere Classic charity concert this year also was at the nearby Rust Belt, at 533 12th Ave., which attracted 1,800 fans to hear Dustin Lynch. The Grammy-winning Bon Iver packed the Rust Belt (which opened in February) in April with 4,000 people, many from other states.
With floor-to-ceiling windows, the Event Center features 4,400 square feet of versatile venue space and can be configured to accommodate groups of up to 350 guests. Their first event was a June 15 wedding reception for 325 and the center is booked every Saturday until Christmas and has events scheduled through 2020, Roberts said.
The new Combine restaurant opened in the center July 10 and is open for lunch and dinner seven days a week. Stoddard called the growing development a “one-stop-shop."
"I believe the market needs time to allow the newer hotels to establish themselves and to allow the entire market to stabilize," he said.
Adding heart to Heart of America
Moline-based Heart of America owns and operates the Elmore hotel, among 17 lodgings it has in Iowa, Illinois, Wisconsin, Kansas and Minnesota. The planned 108-room Axis Hotel, in the historic, eight-floor Fifth Avenue Building at 17th Street in Moline, is expected to open this fall as part of Hilton's new Tapestry Collection of unique boutique hotels, said marketing director Michelle Sparkman.
Listed on the National Register of Historic Places, the 1928 structure will maintain the original terrazzo floors, marble and granite walls, elevator lobbies with coffered ceilings, lobby skylight and existing windows with river views and abundance of natural light. The Fifth Avenue Syndicate bistro and bar will be the focal point of the hotel lobby.
“It's one of the coolest, but there are a lot of challenges,” Sparkman said of the renovation, for which she declined to provide a cost estimate. “When you do a historic rehab, you don't know what you're gonna uncover when you start.”
The point is “to really promote local awareness,” she said. “They call it Tapestry because you're weaving your story to highlight the local city.”
The hotel name comes from when newspapers referred to that intersection as “the axis of Moline,” Sparkman said. And the restaurant is so named because they “always referred to people who built the building as the syndicate,” she said. “I think it's very fitting to use the historic references with it. I think the restaurant is going to appeal to locals a lot.”
Heart of America — which owns 23 restaurants, including Iowa Machine Shed, Thunder Bay Grille and Johnny's Italian Steakhouse — recently opened its first Hilton Tapestry, called Revel Hotel, in Urbandale, a Des Moines suburb.
“I think customers are looking for unique experiences,” Sparkman said. “If you see the same thing all the time, it loses its allure.
“It's all about making it more than just a hotel stay. Even if you're just there for business, it's an experience. You get done with work, and you have a cool bar and restaurant to hang out in; you don't have to leave.”
HOA considers several factors when opening a hotel. “You have to make sure the product is spread out, and make sure there's a need for those room nights,” Sparkman said. “Are there enough events, enough businesses that have meetings? Otherwise, you have a hotel that sits half-empty. Also, it's opportunity. When it came to the Fifth Avenue building, we were just lucky enough to have a chance to be part of that.”
This is the first historic renovation for HOA; the next is downtown Cedar Rapids, with a $50-million plan to renovate the Guaranty Bank Building into a boutique hotel and part of the adjacent World Theatre into a hotel, with two restaurants. A 79-room hotel will open in the 1895 former Guaranty Bank, and retain the front of the former World Theatre next door and build a 126-room hotel behind the facade.
The company also owns the site for a new Fairfield Inn & Suites (108 suites in five stories), next to Great Escape on Elmore Avenue, north of HOA's Holiday Inn. “Now we're seeing we have great success with the hotel there, and we need another one.” That hotel, now under construction, will open in 2020.
A new tourism plan is coming
Thanks to collaboration across the Quad-Cities, even more hotels may be on the way. Herrell and Visit Quad Cities are working with their partners and Resonance Consultancy on a long-term strategic plan to boost tourism.
Herrell, previously of Jacksonville, Fla., has headed the visitor bureau since last fall and has made the new strategic plan and rebranding the Quad-Cities among his top priorities.
With offices in New York and Vancouver, Resonance has produced tourism strategies for groups such as Travel Portland, Tourism Vancouver, Visit Tulsa, and Destination Cleveland. It provides tourism, economic development, strategy, branding and real-estate development consulting.
Surveys of Quad-City visitors and residents are expected to go out within a month, and Resonance plans to issue recommendations by the end of the year.
Herrell said hotels like the Hyatt and Cambria have spurred economic development immediately around them, and he wants to see more.
"That helps define an area," he said. "We can leverage that to drive further economic impact. I think you see a ripple effect. if you have these projects, like TBK Bank Complex, you have more of a destination, neighborhood effect."
Put another way, it's a place where people want to stay.