NL: Economic downturn stalls hotel construction

[DEER LAKE, NL] — The site of the unfinished hotel at the end of Bennett Avenue in Deer Lake is quiet, and has been for some time.

No workers can be seen, and the idle worksite during the warm days of spring has been raising eyebrows.

However, things will be up and running again in mid-August after a pause of about six months according to chief executive officer of Pacrim Hospitality Services Inc., Glenn Squires.

The construction of the 91-room Holiday Inn Express in Deer Lake will resume soon. — Star photo by Katherine Hudson

The developer has been waiting on financing, which he says hasn’t been easy to get.

“Given the economic situation in the country last year and the financing that was available for hotel development, it was next to impossible to get and what you were able to get was not at the levels we had thought that we would be able to get when we started construction,” said Squires.

Squires said hotel construction normally requires a much higher level of equity than other structures such as apartment buildings or shopping centres.

He said for hotels, 35 to 45 per cent of the project must be put forward in cash under normal circumstances; however, due to the poor economic climate, the company was looking at putting up 50 to 60 per cent of the $10-million project or waiting until the economic environment lightened.

“So we decided when we looked at it, if would be better to hold off for six months or put out an extra chunk of our own money, the decision was it made more sense to hold off,” he said.

Squires said a major firm recently did an appraisal on the property which came back “very strong.”

He also said he had a meeting with the contractor to get things ready to get up and rolling again.

“For something like this, it takes us usually four to five weeks to get everything mobilized and back in action again,” said Squires.

Once construction resumes in August, Squires said the hotel should be open by April or May 2011.