Hotel project is high on hope

Staff WriterMay 7, 2009 

Bob Barrett has a dream.

He wants to build a 350-room luxury hotel in West Raleigh. And he wants to break ground in less than a year.

Thing is, he has never built a hotel. He doesn't have many of the pieces in place to do it yet. And he's competing against several seasoned hoteliers who do.

Yet Barrett, 56, is convinced that this $77 million dream will come true, and on time, perhaps under budget and -- one other minor detail -- without setting foot inside a bank.

You see, Barrett says he is going to sidestep that whole credit crunch thing -- you know, the one that is bringing even some of the most successful developers to their knees.

"You can't touch a bank now," says Barrett, a Chapel Hill real estate agent who has dabbled in land deals. "No bank would look at this project."

If one did, it might ask that the developer pay 50 percent equity into the project.

A few years ago, when the economy was booming and leisure and business travel was up, lenders were willing to finance more of a hotel project. Today, lenders are skittish of many hospitality projects -- especially ritzy ones -- as travelers economize.

But Barrett says he's been able to convince private investors to pay for the project. Every dollar. Few projects are paid in cash. "We've actually got a pretty good private equity partner," he says, declining to name the partner.

Must be pretty good. Or extremely confident in Barrett.

After all, there are hurdles aplenty -- especially if the project is to remain on schedule:

Barrett still needs to buy the land, an 18-acre tract off Trinity Road, across from the state fairgrounds. It's under contract, but hasn't closed. The land needs to be rezoned. And a site plan for the project needs to be filed and approved by the planning commission and then the city.

He needs several proposed projects nearby to stay on hold. Concord Hospitality, for instance, is planning a 123-room Hyatt down the street.

Barrett still needs a flag for the hotel. He says he's in talks with Wyndham Hotels and Resorts, but nothing has been signed.

Everything else is solid.

Indeed, the location -- near Interstate 40, next to Carter-Finley Stadium, the RBC Center, amid one of the fastest-growing office submarkets in the region and close enough to Research Triangle Park, downtown Raleigh and the airport -- is ripe for rooms.

Barrett thinks the hotel will easily win business from luxury hotels such as the Renaissance North Hills in Raleigh and the Umstead in Cary. And by getting started soon, he can get a jump-start on the competition.

"Most of the other projects are on hold," he says. "The hotel business is down, but we're anticipating that by the time we open, the economy should have recovered and, frankly, somebody's got to do something."

By acting now, Barrett and his partners can benefit from declines in construction costs. He thinks pricing could be down by as much as 20 percent from the original estimate.

"If we all sit back and just wait for things to happen, nothing will," he says. "We're taking some risk in this and we're proceeding with it. We believe in the area. We believe this will be a pretty successful project."

His optimism is refreshing, albeit greeted with some skepticism.

I ran the plan past some hotel-development veterans in the area. Some were a little doubtful the project would be built on time and without bank financing.

Bob Winston of Winston Hospitality offered a bet: "I'll eat a copy of The News & Observer if somebody builds a 350-room hotel in West Raleigh with all cash."

Game on.

jack.hagel@newsobserver.com or 919-829-8917

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