Despite declining occupancy last year, Mayor Jim Suttle, and his advisors want to expand the downtown Hilton, a city-owned facility that is sub-contracted to the Hilton corporation.
The belief is, with 150 rooms added on, there is a possibility of an additional $2 million in net income. In the first year after they open.
There seems to be a need for additional rooms, to attract large conventions which require meeting space and rooms. The Hilton was, apparently, built with plenty of meeting space, but not enough rooms to accommodate 600 people who use those meeting rooms.
Which is an indication of the government planning that went into this project in the first place.
In the hotel/motel market in Omaha, nobody is building. Nobody is expanding. This is due to the drop in travel, in general; the slow economy; and tighter credit that is especially hard-hitting to commercial projects. Advocates point to the 2012 Olympic swimming trials as a focal point, one venue that would make such rooms necessary. Again, the same thinking that is building a new baseball field for a two-week College World Series stadium.
Last year, the Hilton’s occupancy was down. They’ve dropped their room rates $40/day this year.
If approved, the project will cost an estimated $ 35 million, funded with sales of city bonds. The expansion will require a return of $1 million per year. If revenues are not there, repayment will fall on increased taxes to the citizens. Adding the Qwest Center, the new baseball field, the original costs of building the hotel has quadrupled taxes on Omaha citizens since the mid-90s, already.
The belief is, the current indicators suggest our economy is expanding, so we should act now to take advantage of low interest and construction costs. We don’t have time to think. Gee, this feels familiar; like the federal “game plan” is in effect. Here’s what I think of the current indicators, however.
There’s the difference between private business and government thinking; if government had to run like a business and show a profit, much of what we are funding would be cut without hesitation. If the government had to sell their idea to a bank for funding, they would not get many projects off the ground.
When the “lenders” are taxpayers with no ability to revoke the “application” but live with the payments in the end, the government will consider any suggestion that offers a possibility of generating 50 new jobs once it’s open, and 200 jobs during construction. At $1 million a year.