HIGHFILL -- Northwest Arkansas National Airport officials are waiting on proposals from developers to build a hotel on airport property.
Officials were told Wednesday a request for proposals went out earlier this month and responses are due Oct. 21. A developer could be selected as early as November. Potential developers have been invited to a meeting at the airport this week if they have questions or need more information and to view the site.
The preferred site would be just to the southwest of the parking garage.
"That's an area of the parking lot, basically, that's not likely to be used for anything else," said Aaron Burkes, airport CEO. "That's the last place that our customers go to park because it's kind of out of the way. It's kind of a low cost opportunity area, which is part of the reason we settled on that location."
Officials are thinking a hotel would have 100 to 120 rooms, a restaurant and meeting area and direct access to the airport terminal. Airport parking would be used.
A developer would build the hotel and receive a long-term lease of up to 49 years in exchange, Burkes said.
The target audience for a hotel would be those with early flights out or late arriving flights.
Two Trout, a Fayetteville-based real estate development and consulting company, is handling the selection process for the airport. The company focuses on hospitality advisory and project management services. It earlier commissioned a feasibility and market study to demonstrate the potential demand for an on-site hotel.
Carl Kernodle, with Two Trout, said it wants a national brand travelers are drawn to.
"Our hope is that by the time you all meet again in December, we will be through receiving RFPs, and we'll have a company that we will be entertaining at that time," Kernodle said. "We believe there is a good up side."
In Little Rock, the airport commission operating Bill and Hillary Clinton National Airport/Adams Field, said in December it reached a tentative deal with a Conway hospitality development, management and consulting firm to build the first hotel on its airport property.
"We started planning for a hotel to be developed prior to the pandemic. Passenger levels have since made a strong recovery, which has certainly strengthened demand," said Shane Carter, director of public affairs and government relations. "This hotel will be very convenient for passengers and extremely desirable for those particularly with early morning departures."
The 88-room hotel would be built under the Hampton Inn & Suites brand on an undeveloped 2.5-acre site at East Roosevelt Road and Grundfest Drive.
"We're currently working with our developer, Conway Management, to set a date for the ground breaking of Hampton Inn," Carter said.
The deal consists of a 40-year lease with one 10-year extension. It requires Conway Management to pay at least $54,500 annually in rent for the 2.5-acres and invest at least $6 million in the project in the first 18 months.
Conway Management operates more than a dozen hotels and one restaurant. They were the only hotel developer that responded to a 2019 request for proposals issued by the airport.
Airport officials said the covid-19 pandemic put all hotel development on the back burner, but that is changing.
"Business conditions are now at a point where new developments are moving forward," Greg Garner, the airport's business and properties manager, told the commission's lease and consultant selection committee in December.
Enplanements looking up
Northwest National passenger levels are getting closer to prepandemic levels and could be back to 100% by next year, according to Burkes. He's expecting about 825,000 to 830,000 enplanements for this year.
"That's pretty close to 90% of the prepandemic, 2019 levels," Burkes said. "I don't know if we'll hit that or not, that seems a little bit optimistic."
Airport officials use 2019 as a base comparison because it was the last full year before the pandemic devastated the travel industry.
Burkes said a recession could negatively affect passenger levels because businesses would likely tighten belts as far as travel.
"You go back to the 2008 financial crisis and great recession, it took us seven years to get back to 2008 numbers. That's a risk, a headwind we have to be realistic about as we budget for next year and as we look at our growth prospects for the upcoming few years."
Low-cost carriers are making inroads and increasing their market share at the airport, with 22-23% of expected passengers for the year, Burkes said. Over the last couple months, it's been closer to 26%. American Airlines still leads with 46% of the market share.
"That is having a big impact on fares, it's increasing competition and it's really helping our market, getting a little more diversification," Burkes said.
The average round trip out of Northwest National is now about $406, which is within about $18 of the average of Northwest National's peers, $388. A few years ago, that figure was about $120 above peer average. It's cheaper than Springfield, Mo., at $417, but higher than Tulsa, Okla., where the average round trip is about $358.
"We have closed that gap," Burkes said. "We're saving tens and tens of millions of dollars for our passengers every year with the progress."
Burkes said Northwest National will likely always be a little higher than other airports because the large amount of business travel keeps airfares higher. Airlines have typically charged more in markets dominated by business travel.
Business travelers pay more because of their requirements. They tend to buy tickets on shorter notice and travel during peak periods, according to airport officials. They are also willing to pay more because they travel to earn money, not to spend money, and can accept a higher cost that gives them options to be more flexible.