A Utah developer broke ground on its first-ever project in Washington last week, an extended-stay hotel at Richland’s Queensgate area.
Western States Lodging, Development & Management, based in Taylorsville, Utah, secured permits for a 120-suite hotel from the city in February and began work to prepare the site about a week ago.
The project is under construction at 2861 Lincoln Landing, behind the Queensgate Home Depot. It will operate under Hilton Worldwide’s newest brand, Home2 Suites.
The project boasts a construction value of $9 million. Utah-based Rimrock Construction is the general contractor.
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$9 million Hilton hotel
Western States Lodging is a prolific developer of mid-sized hotels in Utah and Idaho and, most recently, Oregon.
The Richland project is its first in Washington and its fifth in the Northwest.
It previously developed properties in Boise and Pocatello. In 2014, it built side-by-side hotels in Hillsboro, Ore. — a 165-room Embassy Suites and a 106-room Hampton Inn — catering to the Portland suburb’s high tech employers.
The Richland hotel will echo the Hillsboro model. With mini kitchens, home furnishings and laundry facilities, it aims to draw business and government travelers during the week and leisure travelers, such as sports groups, on weekends.
Kris Watkins, president and CEO of Visit Tri-Cities, said the hotel will be a welcome and visible addition to Queensgate. The fast-growing retail district is packed with shopping and entertainment, but has lacked a hotel.
“It’s been great to see that out there. We don’t have a hotel property off of Queensgate,” she said.
It’s been great to see that out there. We don’t have a hotel property off of Queensgate.
Kris Watkins, Visit Tri-Cities
Visit Tri-Cities is also happy to see a well-regarded developer such as Western States Lodging make Richland its first stop in Washington.
Home2 Suites is the new concept for the Hilton hotel empire. It caters to economy-minded travelers.
Properties typically feature four-story wood-frame construction, a mix of studio and one-bedroom units and roughly 4,000 square feet of community space.
They are designed to be built in less than a year. There are 97 locations, including two in Washington, one at Seattle-Tacoma International Airport and one at the Bellingham Airport.
Extended stay hotels are a fast-growing segment within the thriving hospitality industry, said Jan Freitag, senior vice president for Lodging Insights, a publication of STR, an influential hospitality research firm.
By 2014, the average occupancy rate for extended stay hotels was nearly 75 percent and the average daily rate had climbed to nearly $60 — a 7 percent increase in two years, according to STR research.
Freitag said developers and investors are drawn by the positive trends. He’s not surprised to hear a third-tier market such as the Tri-Cities is experiencing an uptick in development.
The metro area added 506 hotel rooms in 2015 and is on pace to add 203 more this year.
3,356 existing in 2014
506 added in 2015
203 expected in 2016
120 already planned in 2017
The primary and secondary markets are saturated and expensive. Third-tier or tertiary markets, offer a profitable combination of reasonable development costs and higher returns. That’s a story developers can use to secure construction loans.
“They can talk to banks in the area. Those deals can get done,” Freitag said. Western States officials were not available to discuss the project’s financing.
The hotel is part of the $30 million Lincoln Landing complex that delivered the Fairchild Queensgate 12 theater cinema at Christmas.
In 2014, Amara Development Co. of Ogden, Utah, paid the Kennewick Irrigation District $1.9 million for the 14.5-acre sliver of land along Interstate 182 between Queensgate and Keene roads.
Richland Hotel Partners LLC, the limited liability company that owns the project, paid $1.4 million for the property in October.