The boom in Anchorage’s ‘Hotel Row’ may have peaked

The recent cycle of steady hotel development in an area of Midtown Anchorage nicknamed "Hotel Row" may have hit its peak.

Three new Midtown hotels are officially on their way, but experts said that might be all the new lodging Anchorage will get for a while.

"I would be surprised if (a pause) doesn't happen after these last three open," said Michael Mohn, a hotel consultant at Seattle-based Hotel Realty NW. "I think that's going to be the end of this development cycle."

Hotel development typically happens in waves like this, he said, and a similar thing happened in Anchorage from 2002 to 2004 and from 2008 to 2009. The city's current wave of hotel construction has lasted four or five years, said Bill Popp, president of the Anchorage Economic Development Corp.

Historically, occupancy rates at Anchorage hotels are higher than national averages, Mohn said, and hotels in Midtown specifically have higher occupancy rates than those downtown. When the Great Recession ended, he said, many developers hungry to get building again looked north for their next projects.

The three hotels in the works are a $19.8 million Staybridge Suites on Calais Drive in between Walmart and the Century 16 movie theater, a $16 million Hyatt Place on Tudor Road near C Street, and a $13.4 million Courtyard by Marriott on A Street near International Airport Road, according to information from city permits. The projects will add about 450 hotel rooms to Anchorage.

['Hotel Row' springs up in Midtown Anchorage]

The opening of a Hyatt House earlier this year and other recent additions have made for "an awful lot of new rooms" coming into the market in just a few years, Mohn said.

"As a result of that, market occupancies are expected to go down," he said. "We don't expect it's going to be a dramatic reset. … You throw enough rooms at any market in a down cycle like that, things are going to soften up."

Tourism, which has been one bright spot in the state's dim economy, was strong last year while other sectors struggled. In 2016, Alaska logged a record number of summer visitors — 1.8 million — since such estimates started in 1985.

"The Outside is betting on Alaska, that Alaska will continue to be a safe place to visit, a strong place to visit," said Hal Hart, planning director at the Municipality of Anchorage.

But tourism, which is at a high during summer, can't carry Anchorage's hotel sector year-round on its own. Hotels here also look to government employees and oil and gas workers traveling through during the rest of the year, Mohn said. Both of those categories have seen job losses amid Alaska's current recession, and last year Gov. Bill Walker instituted travel restrictions for state workers.

[Alaska had more visitors last summer than ever]

Popp said that while tourism in Alaska has been doing well — many people see it as a safe U.S. destination but still seeming exotic — he sees other signs that point to a hotel slowdown.

"I'm just not getting the calls I used to get in regard to market research," he said. "But it was a big run."

Nationally, Mohn said, the hotel industry has been on a longer-than-usual growth cycle for seven or eight years.

"Everybody starts to wonder, OK, when does the industry shut down, if you will, or go backward?" he said.