DATE: Thursday, April 3, 1997               TAG: 9704030406

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER 

                                            LENGTH:   92 lines

DOWNTOWN HILTON WOULD BE FIRST OF THREE HOTELS SOUGHT FOR NORFOLK

The proposed $25 million Hilton Suites Hotel is the first of three hotels city officials hope to attract to downtown Norfolk.

Recommendations for the additional hotels were included in a consultant's report released Wednesday as officials formally announced the Hilton Suites deal.

Steadily growing convention business, a stable economy and downtown revitalization plans that include the MacArthur Center and Tidewater Community College were among reasons cited by PKF Consulting, a consultant hired by the city of Norfolk last October, in its recommendations.

The consultant's plan calls for a mid-market, full-service hotel, scheduled to open in July 1998; a mid-price limited service hotel with 150 rooms to open January 2000; and a full service, convention-caliber, 300-room hotel slated for opening in July 2001.

``I think (Hilton) does fit in perfectly with the recommendations,'' said Rod S. Woolard, economic development director of Norfolk, who talked with seven hoteliers before Norfolk entered a letter-of-intent with Welbro Development Inc. for a Hilton Suites.

The city will consider negotiating with the six other companies on the future hotels.

The Hilton will go up at the corner of Granby and Plume streets. The city is donating the site, now a vacant lot used for parking. Welbro, an Orlando-based hotel franchisee, will underwrite construction and all other costs.

The Hilton Suites, considered a mid-market, full-service hotel, will be 13 floors, with 209 suites, 14,000 square feet of meeting and convention space, a restaurant, room service and concierge service. The hotel will include a 6,000-square-foot ballroom with movable walls for smaller rooms.

Strongest demand should come from commercial and group market segments, the report predicted.

The letter of intent signed by Welbro Development and the Norfolk Redevelopment and Housing Authority calls for the deal to be settled within 90 days. Construction will begin by December and be completed a few months before the expected spring 1999 opening of MacArthur Center. About 135 jobs would be generated, according to city officials.

The study did not recommend building an extended-stay hotel with suites downtown because there was not enough demand.

The Hilton's suites hotel planned for downtown Norfolk is part of a new direction for the company.

``Hilton as a company is going through very rapid expansion,'' said Terry Lavey, general manager of the Norfolk Airport Hilton. ``This Hilton Suites and Hilton Garden Inn are the two brand types where they see the most new potential for growth in new hotels.''

Hilton, which licenses franchises under its name, has aggressively expanded those two brands. Garden Inns are marketed as mid-scale hotels for workweek business travelers and weekend vacationers. Hilton Suites are more upscale, but boast moderately priced rooms between $80 to $90 per night for business and convention travelers, Norfolk Mayor Paul Fraim said.

Welbro believes the Hilton will be poised to tap into Norfolk's emerging convention and tourism-related business. Even now, downtown hotel rooms are often unavailable to individual travelers because of the demand in convention business.

Dan Marone, general manager of the Waterside Marriott Hotel and Convention Center agreed.

``The number of groups has gone up, as well as the size of each group,'' he said of convention visitors. ``We've been getting more groups that want more hotel rooms.''

Marone said the city could accommodate an out-of-town convention with 600 rooms to 800 rooms on a peak night but would be hard-pressed to host leisure travelers and individual business travelers simultaneously.

Downtown hoteliers like Marone, which runs the Waterside Marriott, and the city think the Hilton Suites will expand the convention center business in Norfolk. Some conventions and conferences have been turned away because there weren't enough hotel rooms downtown to accommodate the participants, Marone said. The Hilton would allow Norfolk to host more business conferences and meetings, expanding the city's convention business.

In 1995, Norfolk reported 1.93 million people visited the city, up from 1.78 million in 1994, according to the city of Norfolk. Figures for convention business visitors and 1996 statistics were not available.

Resort hotels shouldn't be hurt by the Hilton because they cater to a different audience, mostly the seasonal summer traveler, said Jimmy Capps, president of the Virginia Beach Hotel/Motel Association. However, other Hilton hotels in the area or facilities catering merely to leisure travelers and individual business travelers could be affected.

``Depending on the market segment you're looking at, it's got its pros and cons,'' said Lavey of the Norfolk Airport Hilton. ``On the convention side, they'll be able to go after larger conventions. It'll expand their focus on that market.''

``For the leisure business and individual business travel, it's extending more supply than demand. There's not a growing demand right now. It's just creating more supply.'' MEMO: Staff writer Jon Glass and researcher Diana Diehl contributed to

this story.

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