Saint John Waterfront Development officials and the Hardman Group are in talks this week in Halifax to discuss the development options for the city's old Coast Guard site.

Last week, Saint John announced it had purchased the prime waterfront property from the Department of Fisheries and Oceans for $2.8 million.

Now that the former Coast Guard site is finally in the city's hands, the Saint John Waterfront Development and the Hardman Group can start launching development discussions.

'But I think in the long run it's a great hotel site, it's a great hotel property and it will, it will happen, it's just a question of when.' — Bill Hardman, president of the Hardman Group

Five years ago, when the city announced it was going to partner with the Hardman Group to develop the site, the plan was to start with a hotel and condominiums.

The plan would then be to add office and retail space.

This week, officials are meeting in Halifax with an unnamed hotel group about building a hotel on the property.

Bill Hardman, president of the development company, said the plans to construct a hotel were made before Irving Oil Ltd. shelved the idea to build a second refinery and before the recession hit.

"Five years ago, it was for sure going to be hotel and the condominiums, today we have to reconfirm whether or not that interest is still as strong as it once was," Hardman said.

Demand dropping

The concept of adding another hotel to Saint John is concerning one industry official.

André Lavoie, vice-president of the hotels division with Château Hotels, said his company opened Château Saint John in the city's north end a year ago.

And the demand hasn't been what he had hoped, he said.

In fact, New Brunswick's tourism statistics show occupancy rates for all hotels in the Saint John area were down three per cent last year.

The Department of Tourism and Parks stated in its 2010 Tourism Indicators that Saint John's hotel occupancy was 54 per cent in 2010 compared to 57 per cent the year earlier.

"I think you need to give it a little breathing time before you start bringing in new hotels in town, " Lavoie said.

Market dictates

As the development moves forward, Hardman said the market will dictate which phase of the project gets constructed first.

But he said he still believes the old Coast Guard property, which is close to the Trade and Convention Centre, and will be connected with a pedway, is ideal for a hotel.

Hardman said he believes the addition of another waterfront hotel complex is inevitable.

"When you have changes in both the demand and the market, the hotel groups really re-evaluate what they're doing," Hardman said.

"But I think in the long run it's a great hotel site, it's a great hotel property and it will, it will happen,  it's just a question of when."