By Virginia Daffron and Brooke Randle
As Asheville awaits the Tuesday, May 14, culmination of a battle royal over the proposed conversion of downtown’s iconic Flatiron building from offices to an 80-room boutique hotel, the time seems right to check in on the local hotel scene. From now through the end of the year, 465 new rooms are expected to join the nearly 8,000 already operating in Buncombe County. With many more approved and under construction in 2020 and beyond, just keeping track of what is being built where and by whom is no small challenge.
In response to community concern that the pace of new hotel construction had gotten out of control, on Feb. 14, 2017, Asheville City Council changed the standards for hotels and large buildings seeking approval within city limits. Whereas most projects up to 175,000 square feet and 145 tall had previously been approved by the city’s Planning & Zoning Commission, the changes meant that hotel projects of more than 20 rooms and any building over 100,000 square feet in size now require Council approval.
How much difference the shift has made, however, is hard to gauge.
While the increased level of scrutiny may have discouraged some developers from bringing new projects forward, many have run the gauntlet to receive Council’s approval. Since the new rules went into effect, Council has given the nod to seven of the eight new hotel projects that have come before it.
Three of the projects were approved by the previous Council, which included members Gordon Smith and Cecil Bothwell. In December 2017, Council members Vijay Kapoor and Sheneika Smith filled those two seats.
Here’s how the votes went down:
- Hotel Krish, 86 rooms, 1500 Tunnel Road, approved July 25, 2017, by 6-1; Vice Mayor Gwen Wisler voted no.
- Innsbruck Hotel by Candlewood Suites, 49 Tunnel Road, approved Aug. 22, 2017, by unanimous vote.
- Boutique hotel, 95 Roberts St., approved Oct. 24, 2017, by 5-2; Wisler and Gordon Smith voted no.
- Hilton, 390 Airport Road, approved Jan. 23, 2018, by 5-2; Brian Haynes and Kapoor voted no.
- Mainstay Suites at Brevard, 511 Brevard Road, approved Oct. 9, 2018, by 4-2; Haynes and Julie Mayfield voted no; Kapoor was absent.
- Extended stay hotel, 324 Biltmore Ave., approved March 12, 2019, by 4-3; Haynes, Wisler and Keith Young voted no.
- Family Lodge, 155 Biltmore Ave., approved March 26, 2019, by 4-3; Haynes, Sheneika Smith and Wisler voted no.
The most consistent hotel opponent has been Haynes, who has voted against approval five times; Wisler has voted against approval four times.
The sole hotel denied under the new rules, a 170-room project at 62 Fairview Road on the outskirts of Biltmore Village, failed on a 6-1 vote, with Wisler in opposition.
Lodging facilities outside city limits, of course, are not subject to City Council’s review and are considered under county zoning ordinances, which are less restrictive.
In what the Buncombe County Tourism Development Authority describes as an “unprecedented” move of self-imposed industry taxation, hoteliers in 1983 advocated for the creation of a local occupancy tax, which was passed into law by the N.C. General Assembly. The industry wanted the revenue to be invested in marketing and advertising efforts aimed at placing “heads in beds.” What began as a 2% tax rate increased over the years, jumping to today’s level of 6% in 2015. Visitors also pay a local 7% sales tax, totaling 13% tax for each night of stay. The occupancy tax also applies to rooms or houses rented out for stays of fewer than 30 days, often through online companies, including Airbnb. Asheville’s growth as a national tourism destination has been a boost for the occupancy tax, which generated $23 million in revenue last year.
Stoking the tourism engine
Three-quarters of the revenue is designated for advertising and public relations efforts to increase tourism and overnight stays. The remaining 25% flows into the Buncombe County Tourism Product Development Fund, which provides grants to projects with the potential to boost tourism throughout the county. So far, the BCTDA-directed agency has awarded $44 million to 39 different tourism-based community projects, including improvements and updates to the YMI Cultural Center and the Grove Arcade, renovating and expanding the Diana Wortham Theatre and developing an African American Heritage and Cultural District that aims to connect downtown Asheville to the city’s historically African American neighborhoods.
The TDA announced earlier this year that it will pause new funding awards from the TPDF while it undertakes a yearlong Tourism Management and Investment Plan process to examine the role of tourism in the community.
No money from the occupancy tax goes directly to city infrastructure or operations, meaning that city property owners foot the bill for police and fire service, road and sidewalk repair and construction, and the costs associated with managing and cleaning up after large numbers of visitors.
The number of people spending time in Buncombe County has risen sharply over the past few years. In 2017, 11.1 million people visited the county — 3.9 million of whom stayed overnight. A surge of new hotel rooms has both driven and served the growing demand. Even in the face of an abundance of lodging options, hotel occupancy rates climbed to 73% in 2017. And while a presentation by industry watcher STR Inc. delivered in January shows that occupancy rates in Asheville may be beginning to level out and describes future growth as “tepid,” local rates remain nearly 10 percentage points above the national average.
Living like a local
According to data from the BCTDA, vacation rentals accounted for 15.25% of total room sales in Buncombe County for fiscal year 2018-19 with sales of nearly $60 million. Collections through March of the current fiscal year total about $50 million, putting the county on track to significantly exceed last year’s collections.
While the city places restrictions on short-term rentals, data compiled by financial technology company Smart Asset found that Airbnb listings alone represented 3.2% of available housing in Asheville and ranked the city No. 1 for the number of listings compared with units of housing stock in the entire United States. The company also estimates that Airbnb rental rates bring in about four times as much as long-term local rentals. Some local activists have suggested this difference in revenue between short- and long-term rentals may incentivize property owners to convert their homes into vacation rentals, exacerbating the area’s affordable housing crisis.
The primary audience for the Buncombe County Tourism Development Authority’s tax-funded ad campaigns is well-heeled older adults — “elite empty nesters” — who spend a significant portion of their time and money on travel, the arts and culinary experiences, according to the TDA’s 2018-19 marketing plan. Secondary groups the agency targets include engaged couples, families, retirees, millennials and business meeting planners.
Advertising efforts focus on four core geographical areas: Atlanta, Charlotte, Greensboro/Winston-Salem/High Point and Raleigh/Durham. Other regional targets include Knoxville, Tenn., and Columbia, Charleston and Greenville, S.C. The authority has also defined “expansion” markets such as Nashville, Tenn., Washington, D.C., and large metro areas in Florida.
That’s all to point out: This is no shoestring marketing effort. The Explore Asheville Convention and Visitors Bureau, the TDA-funded operation that runs the advertising, public relations, marketing and group sales efforts to promote Buncombe County, has demonstrated consistent skill and success in drawing tourists to the area.
The TDA voted in January to shift its ad agency of record from New Orleans-based Peter Mayer to Atlanta- and New York-based 360i. “The agency will support Explore Asheville in generating national brand awareness that will continue to fuel tourism’s annual economic impact of $3.1 billion in the community,” the authority said in a press release about the company’s selection.
On April 24, creative staffers from 360i presented the authority board with concepts for a planned two-year advertising campaign that will span television, digital platforms and print publications. “Let your spirit run free,” urges the planned tagline for the campaign.
One of two planned TV and online video ads “is told from the perspective of a woman who has lived in the Asheville area for many years and experienced all the surprises a visitor will have in store. … The viewer’s outtake? If Asheville has enough surprises to last a lifetime, you’re guaranteed a fair few of them when you visit,” the ad reps told board members. Another ad will focus on “how the Asheville area is so rich in surprises every single day that it’s perfectly reasonable to expect them.”
The price tag for cinematography, music, photography, talent and other services to create the new campaign is estimated at $950,000. Agency staffers told the board that local talent will be commissioned whenever practical.