If business or pleasure takes you to southern Salt Lake County for the night, don't worry about finding a place to stay.

A construction boom will increase the number of south valley hotel rooms from 1,282 in 1994 to more than 3,200 by the end of this year.Since demand for rooms has not kept up with the growth in supply, occupancy rates have dropped about 18 percent in the south valley over the past two years. And fewer people renting rooms means lower profits for hotels.

"The hotel industry is notorious for overbuilding," said Scott Shellman, manager of the Best Western CottonTree Inn at 10695 S. Automall Drive in Sandy. "Demand will certainly catch up with supply down the road. But it's anybody's guess as to when that will be."

Shellman said he thinks the CottonTree, which opened in July 1997, will be able to survive the current downturn. But he will not be surprised if some other hotels declare bankruptcy or have to be sold.

"Since we opened, there have been three new hotels that have opened on the 106th South exit, with two more slated in the next year or so . . .," he said. "I think over the next two to four years it's going to be a struggle for a number of properties."

The problem has caught the attention of the Salt Lake Convention & Visitors Bureau, which has planned a special meeting of area hotel managers Monday at the CottonTree.

Richard E. Davis, president and chief executive of the bureau, said he does not want the south valley to repeat Salt Lake City's experience of the early 1980s, when declining hotel occupancy rates forced many properties to reorganize or seek new ownership.

"A good location, good management and good marketing will help to avoid that, and we want to help with the marketing," Davis said.

The convention and visitors bureau is funded by the transient room tax in Salt Lake County, he said, and its mission is to fill hotel rooms.

"One area of the county appears to be having more difficulty than other areas, so we want to turn our attention to that area and help them through what we think is an overbuilt situation currently," Davis said.

He said the rapid growth of recent years was fueled by Utah's sizzling economy, the success of the Salt Palace Convention Center and anticipation of the 2002 Winter Games.

But the economy is slowing down, Davis said, and the Olympics will only last a couple weeks.

He said the new hotels in the south valley - which he defines as the area south of 1000 South - face additional difficulties due to I-15 construction. And since many of them do not have meeting rooms or experienced sales staffs, it's hard for them to attract group business.

Steve Moss manages the Sleep Inn at 10676 S. 300 West in South Jordan and the Comfort Inn at 8955 S. 255 West in Sandy. They opened about six and 14 years ago, respectively.

Moss said most hotels prefer to have at least 66 percent occupancy, but those numbers have plummeted to 30 to 40 percent recently at his two properties.

"I think the (road) construction plays the biggest part (in the decline)," he said. "All of us out here are really struggling with occupancy, and I think the overbuilt area doesn't help."

Raelene Keller, manager of the Holiday Inn Express at 12033 S. Factory Outlet Road in Draper, said occupancy there has dropped from about 66 percent to 50 percent. She said the 60-room hotel opened in March 1997, and two more hotels have opened up since then just down the street.

"I don't think they're all going to make it," Keller said.

Sallie Calder opened the 10-room Castle Creek Inn at 7391 S. Creek Road in Sandy about two years ago. At the time, she said, hers was the only hotel in the area. Now she competes with businesses that offer 600 rooms nearby.

"When they talk about the occupancy rate declining, if mine declines very much, I don't have a business," Calder said. "A small business owner doesn't have the capital to go through hard times for very long."

Ann Gambrino, executive director of the Utah Hotel and Lodging Association, said she still thinks the Salt Lake area is a high-growth market, but she also believes that some hotels may not survive the current oversupply of rooms.

"There's going to be some people, I'm sure, that are going to go under during the hard times," Gambrino said.

But she said the expansion of the Salt Palace downtown and construction of a new county convention center and Larry H. Miller's building complex in Sandy should help boost demand within a couple years.

Richard L. Davis, Sandy City public relations director, said those projects are drawing continued interest from hotel chains. For example, Memphis-based Equity Inns broke ground last week on an $18 million, 165-room Embassy Suites hotel at about 200 W. 1000 South.

"What's driving it is the demographic shift to the south end of the valley . . .," Richard L. Davis said. "We have seen explosive growth driven primarily by demand, not by ambition or an `urban manhood complex' that says we need a lot of hotels in order to be a big city."

Both he and Keith Snarr, South Jordan's economic development director, said many of the new proposals they are seeing are for full-service hotels, which could host meetings or small conventions on their own.

"Prior to this (I-15) construction, you couldn't get a room in the south valley," Snarr said. "I think it's kind of been an off-year. As soon as the freeway tangle starts to clear out, I think we'll have a green light ahead for a lot of tourism and business travel. . . .

"It can get to a point where it can be too much, but I don't see it reach-ing that point."

Moss said he thinks the area can support the hotels it has now, but he would like construction of additional competitors to end soon.

"I think we've all got our little corners on different markets," he said. "I think we can all survive out here. The downtown area is overbuilt also, and they seem to make it."

But Calder said the next few years will test many south valley hoteliers.

"I can't afford to go down, so I'm working hard," she said. "I feel like it will be those that can hang on that will make it through."



Hotel construction

South valley comparison

Occupancy rate

... 1996 1997 1998 (Through July)

Airport 79.9% 76% 72.7%

South Valley 79.8% 69.3% 61.8%

Downtown 81.2% 76.1% 73.8%

Total (SLC) 80.5% 75.2% 71.4%

Hotel rooms

Year New rooms Total rooms

1994 5 1,282

1995 251 1,533

1996 333 1,866

1997 862 2,728


1998 503 3,231

1999 132 3,363

2000 165 3,528

2001 0 3,528

SOURCE: Salt Lake Convention & Visitors Bureau