Retailers Find Safe Harbor In Storm

Gaylord Project Relatively Thriving

Swarms of customers dart in and out of such stores as Godiva Chocolatier, Jos A. Bank and Swarovski. Patrons wait more than an hour for a table at McCormick & Schmick's. Nearby, in the shadow of cranes and other heavy equipment, construction workers press on with the next phase of condominiums at National Harbor.

Despite a historic economic downturn that has stalled many projects in the region, work continues and business is generally brisk at the mini-city in the making along the Potomac River, one of the largest developments in the region.

Large gatherings at the Gaylord National Resort and Convention Center, the cornerstone of National Harbor in Oxon Hill, are driving traffic to the development, pumping millions of dollars into Prince George's County coffers and creating spillover tourism that has benefited Old Town Alexandria and the District, officials say.

Gaylord typically offers convention visitors many amenities and appealing rates, people familiar with the market said. The branding of Gaylord also makes the project less vulnerable to economic downturns, said Chekitan Dev, professor of marketing and brand management at the school of hotel administration at Cornell University.

"They will be affected by it, but not like a typical luxury hotel," Dev said of the downturn.

Experts say the development's success is also attributable to a dearth of higher-end restaurants and shops in the area and to developer Milton Peterson's track record.

"He has an outstanding reputation in the financial world of producing successful products and of paying banks back," said Christopher B. Leinberger, a visiting fellow at the Brookings Institution.

Leinberger, a professor and director of real estate graduate studies at the University of Michigan, said he has been impressed by the amount of retail businesses that have opened at the development and the reports from restaurant staff and owners about foot traffic.

Even so, National Harbor is not immune to the malaise. Two restaurants that were planning to open there have pulled out. Many contracts for condo sales have failed to close. And although Gaylord's convention business appears to be going well, individual hotel room bookings are lower than had been expected.

Gaylord officials would not say how far they are falling short in those bookings, but they blamed part of the failure on the slower-than-expected arrival of retail businesses at other parts of National Harbor.

"When we came into the year and set expectations, we anticipated far more transient occupancy there than we had . . . at our other three hotels," David Kloeppel, the chief financial officer of Gaylord Entertainment, said during a recent stockholders conference call.

Restaurateur Lonnie Moore expects to open Ketchup, a sister to one of Hollywood's trendiest spots, at the development in March, but he has abandoned plans to also open Dolce Enoteca e Ristorante, a sleek lounge. Moore said his investors want to see how Ketchup does first.