Overrun by Tourists, American Cities Are Taking Aim at Hotels
(Bloomberg Businessweek) -- Peggy Malaspina, a resident of Charleston’s French Quarter neighborhood, is comfortable living among the hordes of tourists flocking to this charming South Carolina city of horse-drawn carriages, lush private courtyards, and 18th century churches. Every so often, she’ll spot someone peering into the windows of her home, assuming it’s a restaurant. If she’s feeling hospitable, she’ll invite them in to look around. “It comes with the territory,” Malaspina says.
More worrisome has been the raft of hotels springing up on the peninsula that encompasses Charleston’s tourist district and on its surrounding neighborhoods. Sitting through a city zoning board meeting, Malaspina watched three projects win approval in a single night, she says. Like many others here, she applauds an ordinance that toughens restrictions on new hotels but stops short of banning them altogether.
“I think it really just puts controls in place,” she says. “I don’t think anyone wants to say, ‘Don’t build hotels.’ ”
U.S. tourism has enjoyed a robust run for a decade. The travel industry has grown for 116 consecutive months, according to the U.S. Travel Association. Meanwhile, the supply of hotel rooms has expanded by about 12% in the past decade despite the threat from the spread of Airbnb-style rentals, according to hospitality researcher STR.
Certain markets have grown far faster, including Nashville, where the number of rooms is up 32% since 2009, as well as Charleston and the North Carolina mountain retreat of Asheville, up 23% and 21%, respectively.
While European destinations such as Venice and Barcelona are famously overrun, some of America’s small historic cities are starting to buckle from a prolonged boom in tourism—and rightly or wrongly, locals are directing some of their anger at hoteliers. Four hours away from Charleston, city leaders in Asheville just passed a moratorium on hotel construction that could last for a year. The Martian landscape around tiny Moab, Utah, has lured so many adventure-seekers that the city temporarily stopped accepting new lodging applications amid concerns hotels were edging out housing and offices.
Developers feel unjustly singled out. Jim Brady is trying to develop a 135-room hotel in Portland, Maine, where city leaders recently required new hotels to pay into an affordable housing fund, arguing that hospitality workers are being priced out. “I recognize that you need to earn a livable wage, and there are sectors that pay lower incomes, and hotels are some of those, but so are food and beverage facilities and retailers,” he says. “It just seemed unfair to say hotels were the cause of the affordable housing crisis.”
In Charleston, a decades-long effort to nurture tourism without spoiling the city’s 350-year-old heritage reached a boiling point recently. Former Mayor Joseph Riley presided over the “Holy City” for 40 years until 2016, and since then the city’s politics have been rife with infighting, locals say. Mayor John Tecklenburg campaigned on a pledge to temporarily halt new hotel construction as a candidate in 2015 and continued the fight upon taking office.
Members of the City Council viewed that as alarmist and pushed for less severe restrictions. Councilman Mike Seekings, who’s hoping to unseat Tecklenburg in November’s election, published an op-ed in Charleston’s Post and Courier newspaper citing a fundraising email Tecklenburg once sent to supporters that included the line: “Every property that has the possibility of becoming a hotel will become a hotel unless we act.”
Tecklenburg stands by the statement, saying market forces are squeezing out all other uses in favor of hotels: “Tourism has been a blessing, but it has reached a point where it is impacting our quality of life.”
The Charleston peninsula had 4,920 hotel rooms in a recent count, and almost 2,600 additional rooms could be built if everything with development rights gets built, City Planning Director Jacob Lindsey says.
On a recent tour of downtown, preservationist Kristopher King points to the site of a parking lot that’s destined to be a 115-room condo-hotel project. Along the city’s waterfront, a former port authority site is slated to become a 225-room luxury hotel, backed in part by the billionaire bond investor Ken Dart. Looming over downtown is a cruise ship operated by the German line TUI Cruises. Ocean liners routinely unload 3,000 tourists into the city, says King, executive director of the Preservation Society of Charleston.
King’s group doesn’t want to thwart development altogether, he says, but it does want to keep Charleston a “working city,” instead of one that depends exclusively on sightseers. The razing of office buildings in favor of hotels, partly because of the high cost of providing parking for office workers, has been a major concern lately. An office building needs significantly more parking spots than a hotel does, and that’s pushing developers to favor lodging, says Lindsey.
King cites what academics call the “cultural irritation index”—or the level of frustration locals feel toward tourism. Venice and Barcelona are high on the index, he suggests. “Charleston’s not quite there, but my fear is we’re getting close to that,” he says.
The city already had rules limiting where hotels could locate, and fairly recently it cracked down on the proliferation of Airbnb-style short-term rentals. Last week the City Council passed a set of restrictions prohibiting hotels from displacing office buildings and requiring them to pay into an affordable housing fund. The latter requirement is expected to cost hoteliers $200,000 to $600,000 per project, Lindsey says.
Across the country, other small and midsize tourist destinations are adopting similar restrictions. In Moab, known for its hair-raising Jeep tours up desert mountains, city leaders this year enacted a temporary ban on new lodging applications until they could develop a land-use plan accounting for hotels. The fear is that all the tourism is straining Moab’s roads, sewers, and storm drains, says City Manager Joel Linares. The number of people visiting Utah’s Arches and Canyonlands national parks grew about 60% from 2010 to 2018, the Moab Times-Independent reported in July. “We don’t want to be seen as anti-tourists and anti-growth,” Linares says. Unlike bigger cities with diverse economies, tourism “is all we’ve got.”
Other cities see a link between rampant hotel growth and a shortage of affordable housing. In Maine, Portland started in January requiring hoteliers to build one affordable housing unit for every 28 new lodging rooms or alternatively to pay into a housing fund at a rate of $3,806 per hotel room. The new law will cost Brady about $500,000 for the hotel he’s building under Hilton’s Canopy brand. Portland isn’t trying to pick on hoteliers specifically, but after studying the issue the Planning Board found that 80% of newly employed hospitality workers couldn’t afford to comfortably rent in the city, says Jeff Levine, who left his planning director role earlier this year. “Every time there was a new hotel allowed, you’d hear that we shouldn’t allow another one,” he says.
Back in the Carolinas, Asheville since 2015 has approved hotels adding 2,800 rooms to its supply. The moratorium on hotel building that city leaders passed last month would give the city time to research the effects of all that new development on roads, water supply, and sewers, according to Planning Director Todd Okolichany. The city also strikes deals with hoteliers on a case-by-case basis that might, for example, require them to pay into a housing fund, though it doesn’t require all hotels to do so, he says.
For the ninth year running, Charleston was named the “best small city in the U.S.” in Condé Nast Traveler’s Readers’ Choice survey. But the accolades are starting to generate some backlash, says Josh Dix, government affairs director for the Charleston Trident Association of Realtors. “You’re starting to hear a lot more from the local level that, ‘Let’s quit winning these awards. Let’s pump the brakes on tourism,’ ” he says. “But the truth is tourism is what drove us to where we are.”
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