Proximity to things. Those mid-town hotels are next to International, which swiftly connects to the airport. Sometimes that is more convenient than staying downtown, especially if the offices you are visiting are peppered throughout midtown. Those restaurants are usually the egg that follows the chicken...adjacent to those hotels for walkable meals. The hotels on C-Street can offer cheaper rates than downtown as well, and don't have to run at capacity to make consistent profit (I theorize, anyway). I also know my friend who works in Seattle for Alaska Structures (based up here), stayed at the Diamond hotel - along with a dozen of his coworkers. That leads me to believe there is other year round demand from industry with offices in South Anchorage.

Also, get ready for more hotels in midtown. That giant cleared area west of the existing slew of hotels is for another group of hotels and some restaurants. I did the landscape plans for two hotels and wetlands mitigation plan for the entire development.