Hotel Overbuilding?

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Highlander
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Hotel Overbuilding?

Post by Highlander » Sun Apr 14, 2019 1:26 pm

https://www.kansascity.com/news/local/a ... 35804.html

Article in the KC Star regarding low occupancy rates in KC hotels after the boom in hotel construction. While I expected KC would create a bit of a hotel glut with so many rooms coming on the market at the same time, the KC Star seems to relish the situation and seems to have taken an anti-development and anti-downtown posture as of late.

KC's biggest issue for filling its downtown hotels is really not about conventions but more about the extremely dispersed nature of its business community with so few companies located downtown. Nobody is going to stay downtown and drive to OP for meetings at Sprint or AMC in Leawood or, for that matter, to the plaza when those areas are replete with hotel rooms.

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normalthings
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Re: Hotel Overbuilding?

Post by normalthings » Sun Apr 14, 2019 4:21 pm

Kansas City will need to book 483,938 more reservations by 2020 just to keep its current occupancy rate steady.
Or roughly 1,300 more rooms per night. This assumes that there is no increase in visitors next year or the year after. Quick hint, the number of visitors has been increasing and is projected to increase as well. The Star conveniently leaves that out.
Kansas City will host the National Society of Black Engineers in 2023 and Destination Imagination, a student education competition that involves 17,000 attendees, moved its global event to Kansas City starting this year.
So two new conventions(moving here due to new hotels and ammenities) alone will fill around 130,000 room nights per year.
Those (hotel) occupancy rates, which started dropping last year after peaking in 2017, are forecast to continue declining if Kansas City can’t drum up new demand for hotel rooms.
This stat is misleading. 2017 was a banner year for one-time downtown conventions. We saw convention attendees spike hundreds of thousands more(yoy) due to US Skating, Mens BB, and Womens VB and others (noted in any official documents for projects I've seen). If you look at the Star graph, occupancy rates are up over the last decade and the last three years. Overall, we are seeing a steady increase in occupancy rates and visitors who will, in fact, fill new hotel rooms.
Kansas City has had some success in recent years. In 2016, there were 279 conventions in Kansas City, which grew to 290 in 2018, according to Visit KC’s annual report. Those figures are still below the 328 conventions that came to Kansas City in 2000, an era of downtown that preceded Sprint Center and the Power & Light District and offered what few would say were attractive amenities to out-of-town visitors.
Conventions that openly left KC due to a lack of hotel rooms and amenities. (covered later in the story)
“Bookings are well above what we anticipated when we underwrote it,” Alex Tisch(LOEWS) he said.
I think that this quote is one of the most important in the article. Hotel brands in KC are happy with their investments, making more than expected, and expanding. More than once in February did I have a downtown hotel tell me that they were at 100% occupancy. I believe the development teams at 15 hotel groups (# of hotels Star says are being built) more than I believe Crosby Kemper and KC Star.

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Re: Hotel Overbuilding?

Post by DaveKCMO » Sun Apr 14, 2019 5:03 pm

We are also attracting new hotel flags that wouldn’t give us the time of day ten years ago: 21c, Loews, Crossroads Hotel (Aparium). That’s gotta count for a change in the market outside of conventions.

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Re: Hotel Overbuilding?

Post by HalcyonKC » Sun Apr 14, 2019 6:41 pm

Even if the article is completely true (and not just another Star attempt at seeding a contrived controversy to ignite newspaper sales), shifting that demand line back to the balance point is easily done: private developers will take some of the older hotel room stock offline and convert it back into apartments or condos. Win-win. My current home is actually in a loft building that was hotel space for a time in the 90's.

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Re: Hotel Overbuilding?

Post by missingkc » Sun Apr 14, 2019 8:33 pm

Given the timing, I suspect this is a pot that has been stirred by the new VisitKC director, Fulvi. Nary a whisper of concern until he showed up, Seems like part of a ploy to enhance his reputation.

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Re: Hotel Overbuilding?

Post by beautyfromashes » Sun Apr 14, 2019 8:50 pm

HalcyonKC wrote:
Sun Apr 14, 2019 6:41 pm
Even if the article is completely true, shifting that demand line back to the balance point is easily done: private developers will take some of the older hotel room stock offline and convert it back into apartments or condos.
Looking at you, Crown Plaza!

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Re: Hotel Overbuilding?

Post by KCPowercat » Mon Apr 15, 2019 8:20 am

Conventions sales are long plays. Conventions are booking for 2024 and beyond right now. Go back to 2015 in KC, bigger convention groups wouldn't even have sniffed at KC due to the lack of hotel supply walkable to Bartle.

We now have the convention space and the hotel supply in place. All up to the visitkc and hotel sales groups now. Their chess pieces are in place. We have a pretty low hotel cost they should be able to bring in some big dogs if they can overcome the traditional KC stereotypes.

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Re: Hotel Overbuilding?

Post by normalthings » Mon Apr 15, 2019 9:04 am

KCPowercat wrote:
Mon Apr 15, 2019 8:20 am
All up to the visitkc and hotel sales groups now. Their chess pieces are in place. We have a pretty low hotel cost they should be able to bring in some big dogs if they can overcome the traditional KC stereotypes.
The article skirts around it but a few of the comments from Loews and VisitKC show that they are in fact bringing in big conventions and big sales.

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Re: Hotel Overbuilding?

Post by beautyfromashes » Mon Apr 15, 2019 9:26 am

I don’t really understand the dilemma. Room prices go down? Older hotels have to remodel? Conversions to housing? I don’t really see a problem. The biggest negative is that we allowed a few bad hotel developments like Home2Suites where we might could have kept all new hotel building higher end. If anything, this is a blueprint for affordable housing: build everything and prices go down on their own.

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Re: Hotel Overbuilding?

Post by johnmatrix » Mon Apr 15, 2019 9:57 am

No convention has ever said "were not coming because you have too many hotels"

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Re: Hotel Overbuilding?

Post by flyingember » Mon Apr 15, 2019 12:40 pm

johnmatrix wrote:
Mon Apr 15, 2019 9:57 am
No convention has ever said "were not coming because you have too many hotels"
Having conventions playing KC off another city for room deals is a situation we want to be in.

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Re: Hotel Overbuilding?

Post by normalthings » Mon Apr 15, 2019 12:49 pm

johnmatrix wrote:
Mon Apr 15, 2019 9:57 am
No convention has ever said "were not coming because you have too many hotels"
Agreed. We are finally getting to the point that we are able to attract back the large groups that we lost in the late 90’s-2000’s.

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Re: Hotel Overbuilding?

Post by WSPanic » Mon Apr 15, 2019 1:11 pm

DaveKCMO wrote:
Sun Apr 14, 2019 5:03 pm
We are also attracting new hotel flags that wouldn’t give us the time of day ten years ago: 21c, Loews, Crossroads Hotel (Aparium). That’s gotta count for a change in the market outside of conventions.
Kimpton too.

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Re: Hotel Overbuilding?

Post by alejandro46 » Mon Apr 15, 2019 8:20 pm

If anything hotels in the suburbs should be worried. If I was in the urban core I would not be too concerned by this somewhat inflammatory article.

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Re: Hotel Overbuilding?

Post by DaveKCMO » Mon Apr 15, 2019 9:30 pm

johnmatrix wrote:
Mon Apr 15, 2019 9:57 am
No convention has ever said "were not coming because you have too many hotels"
=D>

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Re: Hotel Overbuilding?

Post by FangKC » Mon Apr 15, 2019 9:33 pm

Before the new wears off, KC needs to also focus on food and entertainment. Planners do react to feedback, and they tend to return to the "fun" cities over and over. We cannot just skate by on BBQ places and jazz music. There needs to be variety. One of the best advantages KC has for convention travelers is that it's not that far by plane from anywhere in the USA. Many people don't like to travel 6+ hours for a convention. That advantage is meaningless if visitors don't have a good time. Local residents benefit as well.

I'm hoping the streetcar line will draw more new restaurants and entertainment venues along the route.

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Re: Hotel Overbuilding?

Post by TheLastGentleman » Mon Apr 15, 2019 9:42 pm

"The sheer number of hotels in this city produces confusion and chaos. One cannot find food or drink, for every establishment is a hotel. The lost tourist can wonder for miles without seeing anything else. Eventually, panic sets in. 'Why are there so many hotels??', you may ask.

The truth, however terrifying it may be, is that we simply do not know. Therein lies the existential horror of it all, as we can see they sit mostly empty. Who, or what, they were built for has surely long passed, leaving behind only these husks which cast their shadows over the streets below...."

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Re: Hotel Overbuilding?

Post by johnmatrix » Tue Apr 16, 2019 8:38 am

TheLastGentleman wrote:
Mon Apr 15, 2019 9:42 pm
"The sheer number of hotels in this city produces confusion and chaos. One cannot find food or drink, for every establishment is a hotel. The lost tourist can wonder for miles without seeing anything else. Eventually, panic sets in. 'Why are there so many hotels??', you may ask.

The truth, however terrifying it may be, is that we simply do not know. Therein lies the existential horror of it all, as we can see they sit mostly empty. Who, or what, they were built for has surely long passed, leaving behind only these husks which cast their shadows over the streets below...."
Maybe they can transform some of the empty hotels into affordable housing :D

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Re: Hotel Overbuilding?

Post by WSPanic » Tue Apr 16, 2019 10:46 am

FangKC wrote:
Mon Apr 15, 2019 9:33 pm
Before the new wears off, KC needs to also focus on food and entertainment. Planners do react to feedback, and they tend to return to the "fun" cities over and over. We cannot just skate by on BBQ places and jazz music. There needs to be variety. One of the best advantages KC has for convention travelers is that it's not that far by plane from anywhere in the USA. Many people don't like to travel 6+ hours for a convention. That advantage is meaningless if visitors don't have a good time. Local residents benefit as well.

I'm hoping the streetcar line will draw more new restaurants and entertainment venues along the route.
I thought general consensus around here was that we are reaching a saturation point on restaurants and bars too. I don't think we are, but I've seen it mentioned a few times around here.

Regardless, it feels like we really do have a lot of cool/fun options for Convention visitors - but maybe lack in some of the basics - fewer fast food options than other cities may have, no "Target" like store, etc.

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Re: Hotel Overbuilding?

Post by rxlexi » Tue Apr 16, 2019 11:07 am

I thought general consensus around here was that we are reaching a saturation point on restaurants and bars too. I don't think we are, but I've seen it mentioned a few times around here.
I see these comments too, but I think we're a long way from "overbuilding" the restaurant and bar scene, if the concepts are solid. Other peer cities including STL have easily as or more vibrant/crowded food and drink scenes than KC. Certainly it's a competitive market, and concepts will come and go.

I do think within urbanist circles there is a bit of fatigue seeing another restaurant or (especially) bar/drinking establishment open when we are seeing fewer other forms of development downtown - office, brick and mortar retail, for-sale residential, entertainment/cultural venues, urban recreation/trails, that might appeal to a more diverse crowd than single young folks, and expand options for the region as a whole.

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