PORTLAND – A proposal for a new $13 million hotel that would add 124 rooms to the Old Port is renewing an old debate about how many hotel rooms the city can sustain.

Plans for the Canal Plaza Hotel call for a seven-story building on what’s now a small parking lot at the corner of Fore and Union streets. The building would have one retail space on the corner and six floors of rooms.

Each seventh-floor room, overlooking Union and Fore streets, would have an outdoor patio.

The project is being proposed by Cow Plaza Hotel LCC, which is affiliated with East Brown Cow. The company is represented by Greg Shinberg of Shinberg Consultants.

“This venture will provide a much needed boost to the local economy,” Shinberg said in a letter to city planners dated Aug. 7.

Another developer is proposing a 100-room boutique hotel in the former Portland Press Herald/Maine Sunday Telegram building at 390 Congress St., and another hotel is rumored to be in the works on York Street.

Nearly 300 hotel rooms have been added in downtown Portland in the last three years, with the construction of the 120-room Hampton Inn and the 179-room Residence Inn by Marriott.

Additionally, the Eastland Hotel will make $35 million worth of renovations that will add 58 rooms, bringing its total number to 289.

Barbara Whitten, president and chief executive officer of the Greater Portland Convention and Visitors Bureau, said new investment is always welcome in the city, but hotel rooms are being added while average annual occupancy rates have hovered for decades at 58 percent to 62 percent.

“It hasn’t changed in the 25 years I have been watching those (occupancy) numbers,” said Whitten. “If it were to drop lower, I don’t think it would be a good thing.”

Whitten said she would prefer to see the occupancy rate, which ranges from over 90 percent in the summer to about 40 percent in the winter, grow to an average of 70 percent before rooms are added.

“I am an advocate for a strong, healthy hotel climate before adding new rooms onto the market,” she said. “And that hasn’t been the case. People aren’t doing it.”

As proposed, the Canal Plaza Hotel would be about 80 feet tall and have an indoor pool and exercise room. It would fall within the city’s zoning rules, said Alex Jeagerman, the city’s planning director.

The property is within 100 feet of a historic district, Jeagerman said, so the building design would have to be reviewed by the city’s Historic Preservation Board. That review will be done between the Planning Board’s workshop on Sept. 11 and the final vote, likely in October, he said.

No formal designs have been submitted.

Shinberg said in his letter that the team has been careful to blend the building into the surroundings. It would have a granite base and a “high level of transparency” and glazing on the first floor. The design will feature “an energetic, varied facade that engages the pedestrian.”

“The contemporary design of this building will be compatible in size, scale, material and character with this unique part of the city,” Shinberg wrote.

According to planning documents, the developers plan to provide 159 parking spaces in the Fore Street parking garage, which has 409 spaces for monthly and hourly customers.

“Month-to-month parkers are the only current renters at-risk for displacement if needed to accommodate the parking needs of the hotel,” Shinberg said.

He said the project would benefit surrounding businesses.

“(The site) will be transformed into a center of vibrant community activity that will compliment and energize the existing retail establishments located nearby,” he wrote.

Staff Writer Randy Billings can be contacted at 791-6346 or at:

rbillings@mainetoday.com

Twitter: @randybillings

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Correction: This story was revised at 10:12 a.m., Sept. 7, 2012, to state that the newly constructed Hampton Inn has 120 rooms and the Residence Inn by Marriott has 179 rooms.