Representatives from Crowne Plaza Milwaukee West asked the Milwaukee County Research Park Corporation Board to reconsider a proposal by VJS Development Group to construct a 130-room hotel at Research Park in Wauwatosa.
The new hotel would be detrimental to the Crowne Plaza and existing hotels in the area, that are already struggling for business, said Russ Kaloti, with KL Holdings, owner of the Crowne Plaza Milwaukee West.
“There will be casualties in a market that is already saturated,” Kaloti said. “We are pro-development and pro-growth, but this is not fair competition.”
Pewaukee-based VJS is proposing a multi-use project that would include a brew pub in the existing 102-year-old, 8,190-square foot building, commonly known as the M-10 building, and a national brand hotel and up to 11,000 square feet of retail in a newly-constructed building.
VJS was one of three respondents to a request for proposal the research park issued in September for development of the two parcels located at the southeast corner of Innovation Drive and Watertown Plank Road.
The RFP had a list price of $3.3 million for the land. The firm paid $2.6 million for the parcels.
“Frankly speaking, we have not had an opportunity to pursue what we have been approved to pursue,” said Jim Sedgwick, vice president VJS Development Group. “We believe in the market and believe in the growth of Wauwatosa.”
Sedgwick said pulling the plug at this point doesn’t make sense, especially given the amount of approvals VJS still needs from the Milwaukee County Research Park Board and the City of Wauwatosa.
“We are going to go through due diligence,” Sedgwick said. “We’re not going to commit financial suicide just because we want to build something.”
After meeting for 45 minutes in closed session Friday, the board voted to table the issue until its Feb. 9 meeting. The board’s executive committee will gather more information between now and then on the demand for hotel rooms and the desirability of the current tenants at Research Park for another hotel.
Three new hotels are being built or planned within a three-mile radius of the Crowne Plaza: a 128-room Residence Inn at UWM Innovation Campus; a 144-room Homewood Suites at Mayfair Collection and a 103- room Hampton Inn & Suites at State Fair Park.
Michael Newman, general manager of the 200-room Crowne Plaza, said when there is too much supply and not enough demand, quality and service suffer.
He gave the example of Moorland Road in Brookfield, where three hotels have changed brands: the Embassy Suites was converted to an independent brand; the Marriott was converted to a Sheraton and subsequently filed for Chapter 11 bankruptcy; and the Best Western could not sustain its brand and converted to a Midway Motor Lodge.
In the past 12 months, Crowne Plaza, was sold out 30 nights, or 8 percent of the time. The hotel has an occupancy rate of about 65 percent. The ballroom was used 15 times over the last 12 months.
“I can assure you, if you add another hotel, there will be a foreclosure sign on the lawn,” Kaloti said.