Mystic — Mystic Seaport Museum announced Wednesday that construction of a 26-room boutique hotel on the site of the Latitude 41 restaurant will be delayed until early 2022 because of the “economic and market uncertainty caused by COVID-19.”

Construction of the $12 million project by Greenwich Hospitality Group had been slated to begin in early 2021 and ready for a spring 2022 opening.

Also on Wednesday, the museum announced that it has extended its event catering and food service contract with Coastal Gourmet Group of Mystic for one year. That contract had been set to expire at the end of this year because the restaurant will need to be demolished to make way for the hotel. The new contract will run through Dec. 31, 2021.

Coastal Gourmet operates Latitude 41 and provides retail dining and catering services for weddings, events and meetings in other museum venues.

“We are very pleased to be able to continue our relationship with Coastal Gourmet Group as they have been outstanding partners with the Museum for many years,” museum President Steve White said.

Charles Mallory, the founder of Greenwich Hospitality Group, said Thursday that the “project will definitely go forward because its a great project for the Seaport and the area.”

He said the delay is simply the result of “where we are today.”

“In the long term there will be more clarity. We have no idea what the world will look like in six to nine months,” he said.

Mallory pointed out that right now his company has closed 11 of its hotels and restaurants.

“We need to get them open and running and find out where we are,” he said.

During the delay he said planning for the project can continue “so we’re ready when the time comes.” He said the delay may also help Coastal Gourmet make up some for some of the losses it will suffer during the pandemic.

Last month, the Stonington Planning and Zoning Commission approved plans for the three-story hotel, which also will house a 160-seat restaurant with banquet space that would accommodate 250 seats, as well as a guest cottage. Plans also call for a pool and outdoor patio with seating overlooking the Mystic River and an existing dock.

The heads of the Eastern Connecticut and Greater Mystic chambers of commerce both said Wednesday that they were not surprised by the decision.

“It seems like a sensible decision to make,” said Tony Sheridan, president and CEO of the Eastern Connecticut chamber.

“It makes perfect sense because the immediate future is so uncertain,” added Peggy Roberts, president of the Greater Mystic chamber.

The American Hospitality and Hotel Association has been publishing studies on its website in recent days that show an expected dramatic decline in hotel business in the coming months.

Will the region’s economy come back? 

Both Sheridan and Roberts were optimistic the region’s economy will bounce back once the pandemic ends but said it may take some time.

“It’s not going to be like throwing the light switch on,” Sheridan said. “There will be a slow start-up to the economy, but it will happen.”

He stressed that the basic fundamentals of the region’s economy, such as Electric Boat building submarines and the start of an offshore wind industry based in New London, are strong.

“It’s very painful for people now. I’ve furloughed five of my staff. But I feel very confident in the area,” Sheridan said.

“We’ll come out of this and we’ll be stronger,” he added.

Both Sheridan and Roberts said the virus has fundamentally changed the way people do businesses, citing the expanded use of video conferencing service Zoom and other digital meeting platforms, something they say will continue going forward. Sheridan likened it to the improvements in security technology and hiring that came out of the Sept. 11 terrorist attacks.

“The whole world has been turned upside down. We’re all learning how to do business differently,” Sheridan said, adding his chamber has hosted about a half-dozen recent webinars that have gone well.

Both chambers also are busy distributing information to members about getting through the pandemic and assisting them with applying for small businesses loans.

Roberts said businesses are worried and scared.

“But they’ve kept a good attitude because everyone is in the same boat,” she said, adding the chamber recently gained four new members who are looking to open small businesses.

Roberts said people have cabin fever and will be looking to getting out once it is safe to do so. And with people expected to be wary about boarding planes, she said, many may be looking to take days trips or so-called “staycations,” both of which her chamber will be pushing because that would benefit the attractions and businesses in Mystic.

j.wojtas@theday.com