Manchester rumored to drop Austin hotel

The rumor is hot that Doug Manchester is not going ahead with his 1035-room, $350-million hotel in Austin, Texas. I could not get confirmation from Manchester or the owner of the property.

The groundbreaking has been delayed many months. Two days ago, the architect, Todd Runkle of the Austin office of the big Gensler architectural firm, said he believed ground would be broken in May. The last date batted around publicly was November of last year. Runkle claimed he had not heard that Manchester is out, but when I called today (March 13), he was on vacation and not reachable, and neither the Austin office nor the headquarters of Gensler could confirm the rumor.

The rumor has legs because it is logical. If Manchester backed out, "he would be smart," says Rick Besse, a hotel consultant and broker in Dallas. "So many rooms are coming in to downtown Austin. He would be the second 1000-room hotel. It would be better if these were built in stages — one, then another, instead of all at one time."

One of Texas's best-known hotel consultants, who didn't want to be named, says, "I have not heard anything, but I have always thought the project was a bit suspect, especially after the [J.W. Marriott hotel] got under construction." (A 1000-room Marriott will open in 2015 and, according to rumors, has already booked 400,000 room nights and most of the convention business. I couldn't reach anyone there.)

Continues the consultant, "I am pleased to hear the [the Manchester Fairmont Hotel] will not move forward. There are tons of new hotels planned for downtown Austin which will be absorbed, but the 1000-room Fairmont would have caused a huge oversupply in the market."

According to rumors, Manchester didn't have the equity to complete the deal, especially as costs kept rising. Supposedly, another potential owner is looking into putting a 500-room hotel and apartments at the location.

Including the apparently aborted Manchester Fairmont project, downtown Austin was expected to get 3200 hotel rooms in the next three years — 40 percent above the current stock of 8000. That's excessive growth, the experts agree.

In late January, Papa Doug's son, Doug Jr., was quoted saying that his father had not made final financing decisions.