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Chain restaurants drawn to Falls; An expanding hotel market has led to a need for a good dining experience

Many people who work and play in downtown Niagara Falls were pleasantly surprised to see a TGI Fridays open in the Sheraton at the Falls hotel in June.

But Faisal Merani saw the move coming. The Canadian hotelier soon announced his own plans to fill a major gap in downtown dining with a key component: more chains.

"We just had one open up, but I think the city could do five or six more without blinking an eye," Merani recently told the city's development board.

His plans to attract a chain restaurant to his Holiday Inn at First Street and Buffalo Avenue, along with the DiCienzo family's renovation of the Sheraton property, has local officials noting advantages and drawbacks of chain restaurants.

The chains also have tourism and development officials pointing at a steadily expanding downtown hotel market that has caught the interest of major developers from Niagara Falls, Ont.

"It's not just someone from a distant land that's coming in," said John Percy, president of the Niagara Tourism & Convention Corp. "It's someone that has a solid reputation."

The DiCienzo family owns seven hotels in Niagara Falls, Ont., including two Marriotts, a Sheraton and a boutique hotel. They've owned the Days Inn in Niagara Falls, N.Y., since the 1980s and recently converted the Crowne Plaza at 300 Third St., across from the Seneca Niagara Casino & Hotel, into the Sheraton at the Falls.

"We haven't seen the marketplace this development-friendly since we've been there," said Michael DiCienzo, vice president of Canadian Niagara Hotels Inc. "With Mayor Dyster and USA Niagara, they're very welcoming to the development community. They'll listen to what you want to bring to the marketplace. They'll bring you any development assistance or state grant programs. They really walk you through the process."

DiCienzo's Days Inn has one of downtown's few chains, a Denny's in the lower level. It also sits near the Hard Rock Cafe. The conversion of the former Crowne Plaza led quickly to the TGI Fridays opening in the former Old Falls Sports Bar & Grill site. The hotel also features a Starbucks.

"Franchise restaurants, good quality restaurants, are a necessity because obviously when people check in, next to the hotel room, they're going to want to have a good dining experience," DiCienzo said. "Niagara Falls is in need of some good chain restaurants, and we've started that process."

Merani owns a Days Inn & Suites and a boutique hotel in Canada. Though those restaurants don't feature chains, his Days Inn advertises a dining package with Montana's and promotes its close proximity to Planet Hollywood, Rainforest Cafe and the Hard Rock Cafe.

On the New York side of the Falls, Merani recently converted the former Inn on the River into a Four Points by Sheraton and is refurbishing the former Fallside Hotel at 401 Buffalo Ave. He hopes to bring a chain restaurant to the Holiday Inn he purchased in 2005. He listed Chili's and the International House of Pancakes as potential suitors for downtown.

"It's very important to have a chain that's known nationally, not just in Western New York, or the East or West or South," Merani said. "It has to be known in all of North America."

>Public money

In each case, the developers have benefited from public money for renovations.

DiCienzo received $75,000 each from the Niagara Falls City Development Corp. and the state's regional USA Niagara Development Corp. for the TGI Fridays renovations.

Merani received $550,000 from the city's development arm and a matching amount of noncorporate state development funds, an allocation questioned by State Sen. George D. Maziarz, R-Newfane, when the USA Niagara development board met last month.

"It is unwise to award $1.1 million in public funds to attract a chain restaurant in a hotel," Maziarz said in an interview. "My bottom line in all of this is this: How many private-sector, living-wage jobs, permanent jobs, is it going to create?"

Maziarz noted that a national chain like a Ruth's Chris Steak House would be more beneficial to the city than a Denny's.

Local restaurant owners aren't thrilled about the idea of chain restaurants coming downtown, either.

"I think it's going to be detrimental to the family-owned places," said Joseph Fortuna, owner of Fortuna's Restaurant on 19th Street.

Fortuna's family has owned the restaurant since 1945. He said his restaurant offers homemade specialties and a family atmosphere that isn't easily duplicated.

"You're getting what our flavor of our town is, not really of the whole country [with] the chains," Fortuna said. "When I go anywhere, I walk to the locals because I want to see what that part of the country has to offer."

Merani said franchisees are often local residents. He said many doctors, lawyers and other professionals tell him stories about previous jobs they held in hotels he bought.

"Are there jobs that aren't paying a lot of money? Sure," Merani said. "But when you take into consideration gratuity it's a great start for a lot of people."

Currently, the downtown area closest to the falls is marked by numerous Indian restaurants, unconnected chains and an international food court.

Few officials doubt the popularity of chains.

"[Visitors] like to go where they're comfortable," Economic Development Director Frances M. Iusi said. "They know when they get there, they're going to get this level of food because its going to be consistent."

Iusi, Percy and Mayor Paul A. Dyster all noted the importance of local restaurants and said the Falls would benefit from a healthy mix of chains and local establishments.

The mayor said chains are often driven to a city because of "hard math" and that chains can signal a region's economic success to a potential investor.

"If you see a TGI Fridays located in Niagara Falls, you see a Starbucks located in downtown Niagara Falls, that tells you something," Dyster said. "That tells you people who did research thought this was safe. If they thought this was safe for them to go in the water, then it's safe for me to go in water."

>Reasons for growth

Canadian tourists and hoteliers have been driven by more than the potential for chains. They say the hotel market in Niagara Falls, N.Y., has been steadily rising.

One factor has been the Merani and DiCienzo renovations. Another is the strength of the Canadian dollar. Others are tourists from Asia and India who want to see Niagara Falls without applying for two visas, or travelers who are taking regional rather than national trips.

A gaze across the Rainbow Bridge also reveals another reason Canadian developers see the region as one with great potential.

"The Canadian marketplace is somewhat oversupplied," DiCienzo said. "You can't just add new supply without a good plan. We went through a big boom, and it takes an amount of time to absorb [into the] marketplace."

The Canadian Falls marketplace has 18,000 to 20,000 rooms, Percy said, while downtown Niagara Falls has just over 2,000, including nearly 600 at the casino.

Also absent on a large scale are hotels with a 3-plus-diamond rating. USA Niagara has identified eight middle-to-upscale hotel chains the agency wants to attract to the city, including Hilton, Marriott, Radisson and Cambria Suites.

"Niagara Falls isn't just one demographic, it crosses many demographics, and thus we need additional products to offer to that marketplace," Percy said.

Niagara County's hotel occupancy rate was 76 percent in June, Percy said, compared with 68 percent nationally. That rate rises to the mid-80s in the Falls for the summer tourist season. In addition, the average daily rate for Niagara Falls hotels in June rose to $96.61, up 4.9 percent from last year.

Merani said the boom of Canadian hotels -- fueled by the kind of legal gambling Gov. Andrew M. Cuomo referred to last week -- would be hard to duplicate on the American side. He called the Canadian growth spurt "perfect timing" but said a more sustained growth for Niagara Falls, N.Y., is possible.

"There's definitely room for steady growth over here," he said, "and in five years, there could be two or three more hotels, half a dozen chain restaurants and a market to support it."