Publicly-trade REIT Summit Hotel Properties is measuring its options for a 3.18-acre parcel on Caravan Court just outside the eastern entry to Universal Orlando, and should know within the next 75 days if it will develop a new 168-key Hyatt House first proposed in March, repurpose the land or shelve the project, the company's president and CEO told GrowthSpotter.
Summit filed a determination request with the City of Orlando on Sept. 16 for the proposed hotel's final site plan, resubmitting project plan sheets to confirm if they comply with conditions of approval in the Master Plan filed in March.
That Master Plan for both parcels included the proposed nine-story Hyatt House, to be built on 3.18 acres at 5897 Caravan Court, with a few modifications to the existing 151-key Hyatt Place next door. The two hotels would share parking.
Summit owns and operates that Hyatt Place, for which it paid $12.8 million in January 2013, along with the 6.26 total acres across two parcels.
Filing the determination request last week is the next step in Summit's due diligence process, which has taken longer than expected amidst a tightening market for national hotel investment, said Daniel P. Hansen.
"We're still going through feasibility of the project, looking at the viability of our options with construction costs, lending parameters and more," he said on Thursday.
"That parcel was excess land for us, so there was never a requirement to do anything there. We're not married to a hotel concept, we have sold off parcels in the past for other uses," Hansen continued. "I think in the next 75 days we'll have to pick a path. This has already gone much longer than our other diligence processes. We've got a level of skepticism about the viability of this project that we didn't have six to nine months ago."
A slowing tourism market nationwide is a factor in Summit's decision, Hansen said. Rising construction costs, and the potential spread of Zika virus from Miami to Orlando are also considerations, he added.
Hansen cited Orlando's tourism corridor as a healthy hotel submarket with room for growth. The company's other Orlando hotel is a Hyatt Place on International Drive, one mile from the Orange County Convention Center.
But he said with "quite a bit" of new hotel supply being built or proposed on and near International Drive in the past year, potential market oversupply in the coming years is part of Summit's evaluation.
Summit's property is primed for growth when Caravan is connected by the I-4 Ultimate's new flyover bridge to Grand National Drive. That is expected to open in Summer 2017, and has prompted new mixed-use development plans and property sale listings on the northern end of I-Drive.
Cardno out of Clearwater is civil engineer on the project for Summit.
Summit Hotel Properties has a portfolio of 80 hotels with 10,751 rooms across 23 states, according to its website.