Board worries hotel could saturate market

Members note that a very similar application was approved in 2006


Afive-story hotel that straddles the South Brunswick-Monroe border was discussed during a recent South Brunswick Zoning Board meeting.

The firm, Hotel Investors, presented the basic concept to township officials with the understanding that, if approved, the final site plan would then be reviewed by the Planning Board. The application was granted approval by Monroe’s Zoning Board in 2006.

The hotel would be located off Interchange Plaza and would have 116 rooms. The structure itself would be 50,390 square feet on a 1.7-acre lot. Currently the tract is zoned for industrial uses, but the firm’s principal, Jay Patel, said that the area’s proximity to New Jersey Turnpike Interchange 8A made it ideal for hotel construction.

Patel said that the expected clientele would be composed mostly of business travelers attending conferences or working temporary assignments, with rates expected to be between $125 to $250 per room. The hotel would also sport a business center with Internet-ready computers, some small conference rooms, a gym and a pool.

Zoning Board member John McCarvill made note of the intended purpose of the hotel and pointed to similarities between it and a previously approved application for an extended-stay hotel targeting similar demographics. He asked whether a new hotel might negatively impact the surrounding ones.

“I’m concerned about the saturation … that maybe we’re building too much of these,” McCarvill said.

As an example, he said that there were a number of office complexes along Route 1 that weren’t doing as well as expected despite, or perhaps because of, the concentration of competing facilities in a small area. He was worried that if too many hotels were built, none will be able to maintain an ideal occupancy rate.

Patel said he was not worried, adding that extensive market research of the area shows that South Brunswick is still a viable place for hotels. Citing his extensive experience in the hotel development field, he said he would hardly go to all the trouble for an application if he didn’t think he would be able to turn a nice profit.

“[New Jersey] is a very, very strong market. … The demand is also going up,” said Patel. Even if there were three or four hotels in close proximity, “the demand is so enormous” that he feels he would still be able to maintain the bottom line.

But board members were not entirely convinced, and once again brought up a similar hotel approved last year. Board member Steven Mayer called it “almost the mirror image” of the application currently before them. The hotel, located off Route 130, was approved in November of 2006 and also targets business travelers on extended trips.

“We’re not going to wind up with an empty shell,” board Chairman Martin Hammer said.

These reservations were exacerbated by the firm’s lack of a feasibility report – Patel had asked for a waiver from that requirement because he felt that testimony from his years of experience in developing hotels would be just as good as a written report. McCarvill, though, said that he would feel more comfortable if there were a written feasibility study, preferably from a neutral third party, noting that Patel has a financial stake in the outcome of the hearing.

“I would not put down a hotel where I would lose money,” Patel said, adding that it has been difficult enough to satisfy the laws of both Monroe and South Brunswick.

Yogesh Mistery, the firm’s architect, tried to blunt concerns about market saturation by saying that it would actually not be directly competing with other hotels in the area. He said that it would be directed toward a niche market and that this specialized direction means it is less likely to siphon off customers from, say, the nearby Red Roof Inn.

“Even though there are other hotels in the vicinity, you’re not necessarily competing with them,” Mistery said.

As the night drew on, both the applicant and the board agreed that it would be best if they continued at a future date. In the meantime, it was asked that the firm prepare a written feasibility study before the next round of testimony scheduled for Sept. 20.