By CRISTINA JANNEY
The Hays City Commission on Thursday approved a Community Improvement District for a new hotel north of Interstate 70 and west of Old Chicago. However, employees of current hotels said they were concerned with the potential competition.
The Saffron West 43rd CID will implement a 2 percent tax on sales at a new Avid/IHG hotel.
The tax will be levied for 20 years or until the CID maximum is reached. The developer estimates the CID sales tax will generate $622,836.
No bonds will be issued for this project, and the developer will have to pay for improvements up front.
Dirt work has already begun on the property. The $7 million project is expected to be completed in December 2020.
Leigh Purdy, area manager for the Sleep Inn and Suites, spoke in opposition to the hotel development.
"Of course, they are welcome to build this hotel. Obviously they can do what they like, but I don't think it should be at the expense of the taxpayer," she said.
Purdy noted the current hotel room inventory in Hays is 1,031 rooms. The number of rooms available in Hays at its peak was 1,119. The Hilton Garden Inn, which is under construction, would add another 100 rooms.
The developer of the Avid hotel is proposing 79 rooms. The developers of a proposed travel plaza in Hays also want to construct two hotels.
Purdy said increased competition is resulting in decreased revenue for the existing hotels. Revenue for the Comfort Inn and its competitors is down, whereas the Kansas market and the I-70 corridor market both have had increases.
Purdy, who sits on the Hays Convention and Visitor's Bureau board, said as hotels fight for customers, they end up lowering their prices. This can result in less transient guest tax collected in Hays.
"It is common for new hotels to come in, and they price low to attract and build a customer base. Regardless of what market segment it affects directly, it's a trickle-down effect. Holiday Inn lowers their price, Hampton lowers their price, Comfort lowers their price, and so on.
"We need to set the correct rate so we are competitive against a brand-new inexpensive property. For example, why would a traveler pay $120 to stay at a different mid-scale property that is 10 years older when the new hotel is only priced at $100?"
Mayor Henry Schwaller clarified Hays taxpayers will not be paying taxes to support the CID. Only people using the hotel services will pay the sales tax.
"It very well may be that TownePlace Suites has taken away some of your clients. I am sorry to hear that," Schwaller told Purdy.
He said TownePlace was funded through a similar tax program, and similar development programs have been ongoing for 20 years.
"When one opens, others may be hurt, but travelers today are looking for specific branded properties, because they can accumulate points," Schwaller said.
He continued, "We are not going to keep them out of town because we don't want competition."
Schwaller said the development is important and noted the city is down rooms since the demolition of the Ambassador Hotel on Vine Street.
Srujan Vusi, manager for the Saffron property, said his company has looked at the hotel inventory numbers in Hays and still think Hays is a good market.
Commissioner Ron Mellick said during peak times, such as Fort Hays State University graduation and sporting events, visitors are still forced to find hotel rooms in nearby communities.
"It supports our economic development policy, and we have spent years tweaking that and tweaking that," he said.
Commissioner Shaun Musil said, "As a small business owner, I have new competition open almost daily. Do you like it? Absolutely not, but it also sometimes makes you better. You look at yourself in the mirror and ask what you can do to be better.
"I don't think anyone wants to put anyone out of business. I know we don't, but we also want to gain business. I really think they wouldn't be coming to Hays if they didn't think they could grow a business in this town, so that's why I am for it."
Sandy Jacobs also said she supported the CID.
"I don't think I am probably ever going to do anything to keep business out of our community, especially when it is a CID such as this," she said.
Schwaller said the city is not picking winners or losers, it is just creating an even playing field.
Mellick noted existing hotels can apply for CIDs for infrastructure improvements and encouraged those hotels to do so to keep their properties up to date.