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Hotel development in Portland is booming in response to rising room rates driven by the city’s surging popularity as a travel destination.

鈥淚t’s a hot market, so we latched onto it,鈥� said Jeff Madden, general manager of Mortenson’s Portland office.

The general contractor and developer, which opened a Portland office in 2012, has two hotel projects in the works, the Oregon Convention Center Hotel in the Lloyd District and the AC Hotel by Marriott in downtown Portland, and firm leaders are seeking more similar opportunities.

鈥淧ortland is an awesome place. It was somewhat underserved,鈥� Madden said. 鈥淚t can be virtually impossible to get a hotel room downtown. It’s just market demand. That’s why people want to develop hotels here.鈥�

Mortenson isn’t the only developer to pounce on the trend. The 204-room AC Hotel and 600-room Hyatt Regency Convention Center Hotel are among a slew of hospitality projects in various stages of development in Portland.

Demand for hotel rooms and rising rates in Portland have been driven by increased tourism as the city garners more national and international attention, according to commercial real estate service companies tracking the hospitality market. The city also is attracting more business travelers in part because an increasing number tech companies have opened offices in the Portland-metro area.

鈥淧eople want to come here,鈥� said Brian Resendez, a real estate broker with Sperry Van Ness who specializes in Pacific Northwest hospitality properties. 鈥淧eople are interested in it. We are an up-and-coming gateway city to the West Coast and a gateway city to Asia. The market is very solid for hospitality.鈥�

Another factor encouraging more hospitality investment in Portland: Compared to other West Coast cities it’s still relatively cheap to purchase property 鈥搃f you can find it– and develop a hotel in the city, said Mark Fraioli, senior vice president of the hotels and hospitality group of the commercial real estate services firm Jones Lang LaSalle.

鈥淭here’s a great deal of interest in Portland from commercial real estate investors,鈥� he said. 鈥淢any of them find that they’re underrepresented on the West Coast. The opportunities are hard to come by for the buyers, but they’re motivated because they want the diversity of their portfolio.鈥�

Numerous projects on the horizon

In upcoming meetings, the Portland Design Commission is set to review several new hotel projects. A hearing is scheduled on Thursday for the 299-room Porter Hotel on Southwest Jefferson Street. The project is being developed by Widewaters Hotels LLC to be part of Hilton’s Curio brand.

Two other hotels off of Northwest Ninth Avenue are scheduled to go before the Design Commission in May: the 243-room HIS Pearl Hotel being developed by the Raymond Management Company and a 150-room hotel being designed by Portland-based ZGF Architects.

Last year, design commissioners approved two projects that are currently under construction: a full renovation by the new owners of the former Red Lion Hotel on Northeast Grant Avenue into the Hotel Eastlund and the new 203-room Hyatt House hotel, being developed by Portland-based Williams & Dame Development in the South Waterfront.

Developers have also filed plans with the city of Portland to convert existing properties into hotels. This includes plans led by Portland-based Naito Development to renovate and expand the Grove Hotel building in Old Town Chinatown into a 52-room, 190-bed boutique hotel.

The 96-year-old Buck-Prager Building, a former office building Northwest Portland, could also be converted into 70-room boutique hotel, according to an early assistance intake filed with the Bureau of Development Services. Late last year, the Portland City Council rejected a proposal by Portland-based developer Gerding Edlen to demolish the building, considered a contributing structure to the Alphabet Historic District, and construct in its place an 82-unit apartment complex.

Alan Battersby, president and CEO of Grand Ventures Hotel said he was encouraged to purchase and renovate the Red Lion into Hotel Eastlund because of development that’s reshaping the Lloyd District. In particular, he said the proposed Convention Center Hotel will bring more visitors to neighboring hotels like the Hotel Eastlund.

鈥淚 wish it was going up today,鈥� Battersby said. 鈥淲hat we’ve found is that until you’ve reached a saturation point by bringing in a new hotel, it’s actually better for your business. It would be very healthy for the city. The more hotels we get around the convention center, the more we can compete with other cities for convention business.鈥�

A boutique market

Large national hoteliers have been attracted to the city mostly as an ideal market for their boutique brands, Madden said. This was the case with the AC Hotel, a joint venture between Marriott and a Spanish hotel company, he said. The 12-story boutique hotel was designed by Portland-based SERA Architects to have an upscale, European feel. This should be a good fit for the type of clientele Portland tends to attract, Madden said.

鈥淧ortland would seem to like a hotel like this, that’s a little European,鈥� he said.

Demand from national brands to build hotels in the city that are uniquely Portland has been a boon for SERA Architects, which started designing hospitality projects less than a decade ago, principal Lisa Zangerle said. Along with the AC Hotel, the firm designed the Hyatt House and the recently completed Marriott Residence Inn in the Pearl District.

鈥淲e have just had a lot of work and it’s really expanded our portfolio quite significantly,鈥� she said. 鈥淭he projects we like to work on are urban, custom and complex. I think what we really excel at is providing that local feel to our hotels. It’s sort of infusing our touch from a design standpoint that gives it a custom feel.鈥�

SERA designers have been so busy with hospitality work that the firm has actually had to turn away other hotel projects because it doesn’t have the capacity, Zangerle said.

鈥淧ortland, a while back, was really considered a third-tier city and now it’s a hotbed,鈥� she said.