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Growth in Portland's hotel market continues to push construction work, hospitality jobs

COURTESY: ZGF/BAILEY THOMPSON - The Canopy is just one of several hotels that are springing up around Portland, leading to occupancy decreases since supply is exceeding demand.

Despite some concerns about oversupply, hotel construction in the Rose City continues to boom and is providing an increasing number of jobs in the hospitality and leisure sectors.

Portland is experiencing some occupancy decreases for the first time since 2009 because supply is outpacing demand growth, but the city saw a 10% increase in average rate growth in 2015. A dynamic tourism sector and an expected increase in conventions once the Hyatt Regency near the Oregon Convention Center is completed next year are two of the main factors that should continue to support the ongoing hotel demand, according to the Hotel Valuation Index.

In addition to the Hyatt Regency, the index noted other high-profile hotel projects that are underway, including the Canopy by Hilton Portland, The Woodlark Hotel and The Hoxton, as well as recently opened hotels such as the AC Hotel by Marriott that are attracting the attention of both guests and investors.

"The area's strict urban growth regulations and high barriers to entry, marginal new supply growth until now, and strong average rates across all market segments are driving value increases. However, the pace of value growth will be tempered in the near future, with new supply putting downward pressure on value acceleration," the index states. "Nevertheless, strong economic fundamentals and the growth and ever-popular urban core are keeping the Portland market high on investors' watch list."

Oregon's Employment Department noted that employment in the hospitality industry dropped by 6.1% from 2008 to 2010 during the Great Recession but rose 26.9% by 2017, with about one in eight people employed in accommodations. As of last June, leisure and hospitality were still showing strong job growth at 4.8%, and have added 44,300 jobs since their pre-recession peak.

As Portland's newest hotels vie for guests, the amenities they offer are evolving to meet changes in customer demand, said Marcus Hibdon, director of communications and public relations for Travel Portland.

"In our destination, they gravitate toward things that are locally made such as beer and wine, of course, but also maker products such as leather goods, jewelry and stationary," he said. "We have so many talented makers in Portland, it is easy for hotels to contract amenities with that handmade, only-in-Portland aesthetic."

COURTESY: ZGF/BAILEY THOMPSON - The public area in The Canopy features commissioned art similar to what is found in nearby galleries.

An example is the 10-story Canopy by Hilton Portland, which offers 153 rooms on Northwest Ninth Avenue in the Pearl District. Guests can buy locally crafted goods in the hotel lobby, and its public areas feature commissioned art that acts as an extension of nearby galleries.

The 13-story AC Hotel houses 204 guestrooms and features the AC Bar and Lounge, a library, meeting space, high-tech "media salons" and a fitness center. Designed to exude a European feel, the hotel promotes Portland's culture through local art, food and beverages and its hospitality team encourages guests to go explore the city.

William Balinbin, vice president of acquisitions and development for the hotel's developer, Sage Hospitality, noted that the AC Hotel has outperformed initial operating projections since opening in February 2017.

Radisson RED's 4,100 square feet of meeting space at Southwest Columbia and Broadway, includes a game lounge and its website promotes its proximity to the city center for tax-free shopping and performing arts venues. Its website also bills Portland as "a quirky paradise brimming with microbreweries, eclectic events and urban gardens."

The Hoxton Hotel, located on Northwest Fourth Avenue in Chinatown, was formerly the Grove Hotel and is now a nine-story point tower that features 122 boutique guestrooms, a coffee shop, a lobby bar and a bar on the top floor, and a restaurant. The $28 million renovation project also involved The Apartment, a meetings and events space with four rooms and a pantry kitchen. The lobby furniture has been sourced locally, artwork was curated by Pearl District art gallery Upfor, and murals by local artist Buckley adorn the hallways. In addition, the library is stocked with books handpicked by local residents and artists.

"As with all Hoxton sites, we want the guests to feel at home," said Charlie North, design director for Ennismore, which completed the hotel's renovation after purchasing it from Naito Development. "We have a very residential aesthetic. It's all about comfy chairs, soft lighting and a relaxed atmosphere. We also want Portland locals to feel welcome, and feel like they can come for breakfast, lunch, dinner or just to hang out with a beer."

Over 21 months, an office building and a vacant, dilapidated structure were transformed into the Woodlark Hotel. Located on Southwest Alder Street, the 150-room, four-star hotel features a new restaurant, coffee bar, lounge, meeting rooms and a workout facility.

The Porter Hotel, a $59 million, 16-story boutique hotel on Southwest Second Avenue, boasts the Xport Bar & Lounge on its top floor. A pair of covered patios complete with heaters and windproof firepits provide sweeping views of downtown from the rooftop bar.

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