With downtown Wichita hotels doing well, why the need for subsidy?

At a recent presentation by Wichita’s downtown revitalization planning firm Goody Clancy, data was presented that is at odds with the city’s plans.

Goody Clancy consultants presented data showing that downtown Wichita hotels are doing better than hotels in the entire Wichita market. Data from the charts shows that Wichita market hotels command an average daily rate of about $78. The rate for downtown hotels is about $110.

Occupancy rates tell a similar story. For all Wichita hotels the occupancy rate is about 65%, while for downtown hotels the rate is 70%.

According to Goody Clancy consultant Sarah Woodworth, when occupancy rates are at 65% or higher, the area is ready for new hotel rooms. So it seems that more hotels are needed in downtown Wichita, and that new hotels could be profitable.

But we’re getting a different story from Wichita’s bureaucratic class. According to them, a proposed Fairfield Inn in the downtown WaterWalk development is not feasible unless the city supplies some $3 million in subsidy to the developer.

This is according to Wichita Urban Development chief Allen Bell, who says there is a “gap” in the business plan for the proposed hotel. Unless the city steps in and fills the gap, the hotel won’t be built, according to Bell.

The figures that show the gap, however, are provided by someone who has a multi-million dollar motive to create a gap. Bell says his office checks the arithmetic on these figures, but that doesn’t count for due diligence, especially with the city’s recent history of overlooking important facts about proposed projects.

Here’s the real question: with the city’s planning firm saying the downtown Wichita hotel market is strong with the market clamoring for new rooms, why does the city say a new hotel can’t be built without subsidy?


10 thoughts on “With downtown Wichita hotels doing well, why the need for subsidy?”

  1. The issue is that the City owns the Hyatt and will subsidy a competitor across the street. John Q. Hammond wanted to buy the Hyatt and add another tower and the City staff and elected officials did not support him. In addition, the new owners of the Broadview are receiving millions of dollars in subsidy and the City will be competing with them too. The City should NOT be in the hotel business.

  2. If Fairfield can’t build a hotel without subsidies, then it shouldn’t be built. Granting them subsidies creates a precedent for whoever wants to build on each plat of land in the Waterwalk. The city paid Gander Mountain to come here; enough is enough. When is the city going to install the fountains? Maybe if they will get that done, then others will follow.

  3. Mayor Mayans, I agree the city should not be in the hotel business or any OTHER BUSINESS! If a need exists for ANY downtown development; hotel, restaurant or arena… the FREE MARKET will provide it! Case closed.

  4. The missing ingredients in this plan and the governors plan to increase taxes are common sense,and the desire to do what is good for Wichita and the state of Kansas. They need to read some books on economics by Tom Sowell,etc.and look at the history of the misery caused by increasing taxes in a recession.
    There is none so blind as those that do not want to see!!!!

  5. And the city won’t be in the hotel business with the Fairfield. They are only allowing them to keep the guests taxes expected to be received. Why can’t the free market come up with another developer to give us enough hotel rooms to bid on the bigger conventions.

  6. Hi, the one thing that I would agree that government should do in downtown Wichita is to buy up the old buildings, tear them down, and then sell the land to developers at auction. Government (fed, state, county, or city) should not be in business. If it is REALLY reasonable for a new hotel to be built downtown, a developer will provide the money, build it, and run it.

    Mike

  7. Mike, that would require eminent domain for economic development which is bad policy. Many if not most of the downtown buildings are on 100 year land leases. The underlying ownership is sometime held by multiple parties, many who no longer live in Wichita. I don’t believe that their property rights and ownership rights should be trampled upon.

  8. Pat, I agree, but why were you not complaining about “trampled property rights” when eminent domain was used to acquire some of the parcels for the Waterwalk?

  9. The city apparently has millions for corporate welfare for another hotel downtown. If hotels are such money makers, why does the city sell its Hyatt Hotel? It lost money throughout its first few years of operation and then the city changed its agreement so you could no longer see how much money it was not making.

    What is also interesting is the city giving the back of its hand to the Childrens Action Center for abused and murdered children. The city would not fund this group with even a nominal contribution or $100k a year, but they can spend $3 million for another downtown hotel.

  10. Carlos, who says I wasn’t? Regardless, at this point, that is water under the bridge, over the dam. Going forward, the city needs to protect its investment in Water Walk.

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