Originally posted on Amarillo.com http://www.amarillo.com/stories/030110/new_news5.shtml
|Room for debate on hotelConvention center site contentious
By Karen Smith Welch
Wish listThe city of Amarillo’s hotel wish list:
“You’ve got the (convention facility) space. That’s not changing,” said Rob Hunden, the city of Amarillo’s hotel consultant. “Do you fill it, or do you let it sit there?”But critics say the project would be a killer, period.
“If you build a convention hotel downtown, all you’re going to do is destroy the small mom and pop hotels in this community,” said Tom Muse, general manager of the Holiday Inn at Interstate 40 and Ross Street.
“Unless somebody could show me on paper that they (Amarillo) have lost out on $20 or $30 million in revenue in a 12-month period for this community, I can’t see where it (the project) would ever be justified.”
Hunden justified it in October 2008 by estimating that a convention hotel built across Buchanan Street from the Amarillo Civic Center could generate $33 million in annual spending on its operations, $10.4 million more in personal income annually through the creation of about 800 jobs and $3.9 million in revenues from property, sales, hotel-motel and auto-rental taxes.
He estimated the project could cost $50 million to $80 million.
Amarillo doesn’t want to own a hotel, as other cities have opted to do. But it would consider offering public incentives to entice a private developer to build and operate one, Hunden said.
How much those incentives might be worth remains an undetermined bargaining chip.
Notice that the city is hunting for a development team to build and operate a hotel was distributed widely by Hunden, the city and Downtown Amarillo Inc., a nonprofit promoting downtown revitalization.
Developers that survive a qualifications round will be whittled to finalists that will be asked to submit specific project proposals.
The hotel market has softened since the economic downturn, Hunden told 15 to 20 developers gathered for an optional pre-bid meeting Feb. 18, but “we believe there’s enough horsepower there” to support a convention hotel.
Others argue the combination of the recession, which has weakened travel demand, and rooms just built or under construction make this the wrong time to consider public incentives to assist one hotelier.
“Can we wait until we fill the rooms that we have built before we add another blow?” Ambassador Hotel General Manager Phyllis Payne asked. “The economy is the poorest it’s ever been, and we continue to build hotel after hotel.”
The average occupancy rate in Amarillo hasn’t suffered as much as it has in other cities in Texas and elsewhere, industry analysts Jan Freitag, of Smith Travel Research, and Doug Sutton, of Source Strategies said last month.
Seven properties costing more than $50 million total are under construction or about to launch, including a Holiday Inn that will be full service, meaning it will contain a restaurant and other amenities. Combined, the projects will add almost 770 rooms to the market inventory.
But the Amarillo market isn’t pulling in enough revenue per available room, Payne said.
“We’re the worst performer in the state,” she said.
The Amarillo market logged a RevPAR, as the statistic is known in the hotel industry, of $34.04 for 2009, down from $36.44 in 2008, according to Source Strategies Inc.
The figure ranks below most of the RevPARs of larger Texas cities, such as Dallas and Austin, as well as cities more comparable to Amarillo.
“It would be wonderful to have a hotel in downtown Amarillo, but it would be more wonderful to have more business and to have those people stay in the rooms that we have,” Payne said.
But market RevPAR data must be looked at on a case-by-case basis, Sutton said.
“You can’t just say, ‘We’re really a horrible hotel market because our RevPAR doesn’t compare,’ ” Sutton said.
A market that contains a military base, for example, might see more travelers who stay in budget hotels, he said. Therefore, a lower RevPAR could work for properties that charge lesser rates.
Muse blamed loss of convention business on a lack of aggressive marketing by the Amarillo Convention and Visitor Council, which receives hotel tax money for the job.
CVC Vice President Jerry Holt disagreed.
Amarillo did lose two weekends, representing about 5,000 room nights, of what traditionally has been a three-weekend Jehovah’s Witness conference because the city isn’t as central a location for the group anymore, he said.
“But we’re holding our own,” Holt said, “particularly considering everything else that’s going on in the marketplace and in the economy.”
The key to booking more convention business is a hotel situated a short walk from convention facilities, “and if it doesn’t exist, the city might not even have a shot at bidding on the business,” said Deborah Sexton, CEO of the Professional Convention Management Association.
Outlying hotels will benefit from overflow room bookings, she said.
Sure, Amarillo will be better able to compete, Sutton countered, but it will do so against cities that have more pull as destinations.
Developers interested in pursuing a hotel project must submit first-round information to the city by 4 p.m. March 9.
The hotel must open in late January 2013 or earlier, according to city specifications.
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