Coast river business journal., August 12, 2020, Page 9, Image 9

BUSINESS NEWS
Coast River Business Journal
August 2020 • 9
Covidtime lodging:
Most entrepreneurs still moving ahead with projects planned before pandemic
Story and Photo by Edward Stratton
Coast River Business Journal
estratton@crbizjournal.com
SEASIDE and ASTORIA — Hotelier
Masudur Khan recently opened the 65-room
SaltLine Hotel in Seaside, finishing several
years of planning and construction. It’s a project
Kahn said he might have delayed until after the
coronavirus pandemic, had the building not been
so far along.
Khan’s concerns echoed those of other
developers who, while still finishing their
construction projects, predict a hesitancy in the
future.
Hotel occupancy nationally dropped to
around 22% by early April, according to real estate
analytics firm STR. But hotel construction still
reached record highs, with 220,000 units under
construction across more than 1,700 properties
that month. The market has since slowed but is
still more than previous years.
The frame of Khan’s new $11 million, four-
story hotel had already taken shape by the time the
pandemic temporarily shut down the several other
properties he and wife Taslema Sultana own.
“When it started in March, we were halfway
done, right, so we have to finish it,” Khan said.
‘Could be worse’
Tightening supply lines delayed the opening
of the hotel. Khan has struggled to find enough
employees, with the foreign student workers
that help supplement locals blocked by travel
restrictions.
“We are losing 15% to 20% revenue for the
hotels,” he said of recent months. “That’s what I
was kind of expecting. It could be worse, but it’s
not enough for us to sustain in the winter.”
Khan said he and others are worried about
another shutdown of lodging as coronavirus cases
increase in Oregon. He has pushed the city of
Seaside to do more in promoting social distancing
and the wearing of face coverings to prevent the
virus’ spread.
Khan said his project is more viable because
it’s pursuing an upscale market seen more in
Cannon Beach, rather than competing for existing
visitors.
“Competing with what we have right now, I
don’t think it’s the right time to bring more rooms
into the city until the pandemic situation is settled,
because we are scared (even) as a strong hotelier,”
he said. “I’ve been 10 years in the business,
and I’m worried about my business future here.
Because there are a lot of unknowns, and anything
can happen. We kind of cross our fingers, hope for
the best and plan for the worst.”
Construction not heavily
impacted
Mike Salsgiver, who as executive director
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Masudur Khan recently opened the Saltline Hotel in Seaside during the coronavirus pandemic.
of the Associated General Contractors represents
commercial developers, said the impacts on
construction haven’t been dramatic so far. He
warned that the impacts would likely be longer-term.
“We are seeing owners, project owners — the
people that actually pay for the projects to get built
— making decisions now that are either delaying,
deferring or canceling projects because they no
longer make financial sense,” he said. “I mean, we
went from a white-hot economy to a depression-
level condition macro-economically in the space
of six weeks.”
Jan Freitag, the senior vice president of
lodging insights with STR, recently told online
travel publication Skift that the firm expects a
continual decline in hotel room construction for
the foreseeable future with all the uncertainty
surrounding coronavirus and the economy.
“We expect owners and lenders will continue
to be very cautious when it comes to funding new
projects,” Freitag said. “That then implies, yes, the
projects under construction will continue to finish
and open, but there will be a breather on projects
that will break ground.”
Seeking more time
Hotelier Mark Hollander, who received
approval in 2018 for a new four-story Marriott
Franchise in Astoria, has been fighting to continue
his project after Astoria city staff denied him an
extension of building permits, a decision the
city council recently affirmed. Hollander and his
attorney argued that the pandemic has substantially
altered the hotel market.
In their denial, city staff argued that Hollander
received building permits 18 months before hotels
closed because of the pandemic. They also noted
two other future Astoria hotels — the Bowline
near Buoy Beer Co. and a Hilton Home2Suites
franchise near the New Youngs Bay Bridge on top
of the former Bayside Sentry Market — are still
moving forward.
Hollander argued that no hotels had started
construction since the pandemic began. Bowline,
which is repurposing a former sardine cannery, was
already in buildout by the time hotel restrictions
came into place. John Ferguson, part of the Kansas
City development team behind the Hilton, said his
project is close to construction.
Ferguson credited his development group
with already having the funding in place to build
before the pandemic tightened banks’ purse
strings.
“The covid caused some problems
nationally,” he said. “That slowed the bankers
down a little bit, but not for us. We’re funded.
We’ve just got to step up and start construction.”
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Looking a year out
The partners don’t want to open up in the
middle of a pandemic, Ferguson said, but are
hopeful the virus danger will subside by the time
they hope to open shortly before next year’s busy
season. A vaccine is expected early next year.
“What we have now is a socioeconomic thing
about what’s going to happen,” he said. “Is there
going to be a second wave before we can see the
downtown in the numbers? We all believe this will
eventually do like the (H1N1 virus) and kind of
recede into just a distant memory.”
Ferguson echoed Salsgiver’s concern
that future hotel construction projects could be
delayed, with high vacancy rates in many office
buildings as people work from home and avoid
traveling to large urban areas. But people in the
city are escaping to destinations like the North
Coast, leading to a better market in places like
Astoria, he said.
“I know the big cities are not where I want to
be,” Ferguson said. “I can tell you that.”
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