Local hotel industry growing with additions, expansions

Recovering from the recession, the Sonoma County hotel market is growing. To get a sense of the bullishness in the more than $200 million market, take a look at the Desai family of Healdsburg.

The family’s latest business venture, led by Nick Desai Sr., just broke ground in Windsor off Highway 101 on a new full-service Holiday Inn with 100 guest rooms, an Italian restaurant, full bar and banquet facilities. It complements another family business venture that operates the Holiday Inn Express also in Windsor, which was the first hotel built in the town when it opened in 2005.

“Windsor had no hotels at all. It was a town that everybody drove by,” Nick Desai Jr. said. “We wanted to change something in this county.”

The ambition of the Desai family should not be underestimated as Nick Jr. is a 17-year-old senior at Rincon Valley Christian School. He owns and operates another family venture, the Travelodge in Healdsburg, with his brothers, Kevin, 19, and Brandon, 16. Nick Sr. opened that hotel in 1992.

“We’re in it for the long haul,” Nick Jr. said.

The optimistic view is being shared by others in the hotel industry. A five-story Oxford Suite hotel with 163 rooms is planned for Rohnert Park, near the Graton Resort and Casino. The Federated Indians of Graton Rancheria, which owns the casino, eventually wants to build a hotel on its 254-acre property.

“You’re seeing a healthy, robust market,” said Ken Fischang, president and CEO of Sonoma County Tourism. “If the market will bear it, we’ll see it.”

The statistics so far are bearing it out. The average occupancy rate in Sonoma County through August stands at 75 percent, which is up 3 percent over last year, according to travel research firm STR Inc. In contrast, the average occupancy rate in 2011 was 63 percent.

The average daily rate for a hotel room is at $136.16 through the first eight months, which is an 8-percent increase from the same period last year, according to the report. Hotel revenue during the same time period is $150 million, which is an 11-percent increase.

The activity has not just been limited to new properties as existing hotels are renovating. For example, the Farmhouse Inn in Forestville is adding eight rooms and the Vintners Inn in Santa Rosa is planning 30 new rooms, Fischang said.

The Geyserville Inn conducted a two-year upgrade of its rooms and remodeled its restaurant, with inclusion of a full bar, owner Dan Christensen Sr. said. The restaurant nows serves dinner on three nights, and Christensen plans in the future to do wine-pairing dinners.

“We’ve really seen an uptake in business over the past two years,” said Christensen, who has owned the property since 1997.

The hotel has a diverse of clientele, from wedding parties to couples visiting wineries to tourists stopping through on a day visit as they travel through the Golden State, he said.

One visitor group that has increased over the year is bicyclists, who enjoy the inn’s location in the middle of Alexander Valley and take scenic bike rides throughout Wine Country. The refurbished restaurant will allow his customers to have a nice meal with drinks after a long bike ride, rather than going off to nearby town such as Calistoga for dinner, Christensen said.

The buildup will also help the finances for local cities and the county, both of which assess hotel taxes. Windsor charges a 12-percent tax, which brings in $1.5 million annually from its two hotels and one time-share facility, said Linda Kelly, town manager.

The town earlier this year had a feasibility study conducted for a potential boutique hotel near its Town Green. The downtown site is expected to become even more popular with development of the mixed-use Bell Village project northeast of Town Green.

“We’ve had a handful of hotel developers step forward to ask to speak about with their interest in the downtown,” Kelly said. “We’re pleasantly surprised to see interest from the hotel industry.”

While robust, the growth likely will be manageable given that banks are still cautious on financing hotel projects in the aftermath of the 2008 financial crisis, when they suffered losses on many projects that later collapsed, hoteliers said.

For the Desai family, persistence paid off as it purchased the land in 2008 and took six years to break ground, Nick Desai Jr. said, especially as the permitting process took a very long time.

“Some people might give up if things don’t go their way,” said Desai Jr., a first-generation Indian-American who would like to have a legal career in the future. “Windsor takes a lot of time. It’s not easy to get permits in that town.”

But his family believes the Windsor location will be able to prosper, especially competing against pricier options in Healdsburg a few miles north.

Desai Jr. noted he and his brothers are grateful for the foundation that his father and mother, Priti, established in the business, which also includes one San Francisco hotel.

“They created a path for me and my brothers to be successful in ours,” he said later via email.

You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.