New York’s Niagara Falls to battle Canadian side with upscale hotels

Finding an upscale hotel experience on the American side of Niagara Falls has been a challenge for many years, but it will soon be getting a little easier.

With seven hotel projects either planned or already under way, downtown will see about 950 new or renovated rooms, all of those providing higher-end accommodations, in the coming years.

And upscale is exactly what downtown needs, according to local and state officials.

For the last decade, the hotel market in Niagara Falls has been trending upward, with occupancy rates and room rates on the rise. But, the market share for upper-end accommodations still falls far below that of the Canadian side, said Chris Schoepflin, president of the state-run USA Niagara Development Corp.

“We’re trending in the right direction, even as we’re working to get more rooms online,” Schoepflin said.

A study performed in 2011 by HVS Consulting and Valuation Services, a consulting firm specializing in the hospitality industry, found that Niagara Falls, N.Y, had a lack of high-end hotel rooms, which puts it at a competitive disadvantage to its Canadian counterpart.

There are 3,000 hotel rooms on the American side and roughly 66 percent of those are economy lodging or independent properties, according to the study.

Compare that to the 16,000 hotel rooms on the Canadian side. While Canadian tourism officials said they were not certain what percentage are above economy rooms, they said a significantly larger percentage — more than 50 percent — of their rooms were considered high-end.

Added incentives

The state has tried to sweeten the pot for developers looking to close the market gap for upscale accommodations on the American side. The seven hotel projects on their way represent $100 million in investment, $10 million to $15 million of which will be provided by the state, Schoepflin said.

That’s on top of tax breaks that some hoteliers have received from the Niagara County Industrial Development Agency.

Schoepflin said the consulting company suggested the American side add new hotel rooms, but also convert existing hotel rooms into newer, higher-end digs.

The Days Inn on Main Street is an example of that change. Owner Michael DiCenzio is using a boost from USA Niagara to convert the mid-level hotel into a Courtyard By Marriott with a $1.5 million incentive to put toward the $10.9 million project.

Renee Poston, a tourist staying in the Giacomo Hotel with her husband and son this week, said the family had trouble finding the types of restaurants and shopping experiences that they were seeking during their stay in the Falls. The family got lost while out shopping.

“We had to go out to find the nicer things,” Poston said.

And Poston, who decided to take a detour to see the natural wonder on the way to a baseball tournament in Cooperstown, had trouble finding the level of accomodations she was seeking for her family before happening upon the Giacamo’s website.

“When I looked online I didn’t see a lot of places that were nice enough to stay in,” she said.

The family from Georgia thoroughly enjoyed their stay at the historic United Office Building, opened as the Giacomo Hotel in 2010 after a renovation by Ellicott Development of Buffalo.

“This place has been wonderful,” Poston said. “We would definitely come back here again.”

Budget-conscious travelers and upscale investors

Faisal Merani, a hotelier with properties on both sides of the river, said the HVS study highlighted a market gap that presents an opportunity for investors.

He said the Falls draw people from across the spectrum of income levels. The American side has done well to provide accommodations for families looking to see the Falls on a budget, but investors have yet to provide the activities and lodging that big spenders desire.

“You need to be able to cater to all markets,” he said.

Merani and his company, LaSalle Hospitality, Inc., are currently working on turning the vacant Fallside Hotel and Conference Center on Buffalo Avenue into a higher-end, 200-room lodging house that will feature an upscale restaurant and bar and possibly a spa.

The company is getting $2.75 million from the state — $2 million from Empire State Development Corp. and another $750,000 from USA Niagara — to help complete the $18 million renovation.

Merani said the renovated property will be a flagship hotel, but he would not reveal the brand because he is still in negotiations.

Stay awhile

The uptick in hotel rooms serves two purposes, as the American side has a need, not only for high-end rooms, but rooms in general.

“Right now, from June to September there’s simply not enough hotel rooms in Niagara Falls, N.Y.,” Merani said.

And USA Niagara wants to promote and incentivize attractions to go along with the swankier rooms.

“Simultaneously, we’ll start working on product, like attractions and things to do” Schoepflin said. “Now you’re not only giving people a place to stay, you’re giving them a reason to stay longer.”

The upscale hotel rooms are also an important element to drawing larger and more prominent conferences to the city. Event organizers will not book in an events center if they are not confident that their guests will be happy with the accommodations, Schoepflin said.

“As we add beds that’s going to be better for the leisure visitor, it’s going to help the (Conference and Events Center Niagara Falls) market to larger sized conferences,” Schoepflin said. “They demand a certain quality of rooms and a certain quantity.”

While the conference center has consistently grown its convention schedule, it still lags behind the new Scotiabank Convention Centre on the other side of the border.

The conference center on Old Falls Street saw 13 conventions and 117 meetings and conferences in 2012. The average convention size was 775 attendees while the average conference or meeting drew 99 people. The largest convention at the conference center in 2012 — the American Culinary Federation Convention — drew 900 people. The conference center saw 22,000 visitors in total last year.

By comparison, the Scotiabank Convention Centre on the Canadian side of the Falls — which opened in 2011 — saw 130 events, 70 of which were conferences and trade shows, in 2012. Those averaged about 750 people per event and their largest convention drew 25,000 people. The center has seen about 250,000 people a year since opening, according to numbers provided by the center’s staff.

Kerry Painter, the president and general manager of the Scotiabank Convention Centre, said that the state-of-the-art facility she runs would not be nearly as successful as it has been without the glut of high-end options for visitors within walking distance of the center.

“It’s a package,” Painter said. “It’s not just a building. It’s a building and a destination.”

Painter sees the task of building up the destination around a conference center as more challenging than building a conference center into a destination, as was the case with Scotiabank Conference Centre, she said.

“We had the destination here and we just had to drop the center in,” Painter said.

Added benefits

For Mayor Paul Dyster, the high-end accommodations on this side of the border represent jobs.

Franchise hotels like Marriott and Wyndham will yield a higher number of better quality jobs than economy hotels. Those franchises require operators to provide certain services — laundry, valet, restaurants — that in turn will require more service industry employees, Dyster said.

And the folks seeking upscale rooms are more likely to to stay longer and spend more money in shops and restaurants than guests of economy hotels.

“The spin-off value is higher, the higher the cost of the room,” Dyster said.

In addition, those flagships attract more visitors and have advanced booking systems that help to keep their hotels full. That will help to extend the tourist season and put more pedestrians on the street all year round, Dyster said.

“Flagships attract more visitors,” Dyster said. “More pedestrian traffic is going to help every business downtown.”

CHECKING IN TO THE FALLS

Hotel projects under way in the city: –Hotel Niagara Renovation $20 million –Wingate at 4th Street and Buffalo Avenue $9.6 million –Fallside Hotel and Conference Center $18 million –Hamister Group Development on Rainbow Boulevard $25 million –Days Inn renovation on Niagara Street $10.9 million –Moore Business Forms renovation on Buffalo Avenue $9.5 million –Fairfield Inn & Suites on Rainbow Boulevard $7 million

Contact reporter Justin Sondel at 282-2311, ext. 2257 ___