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Hotel plans push on despite low occupancy rates

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Though hotel occupancy rates are in better shape than they’ve been in awhile, hospitality officials are stopping short of calling the market healthy.

The August room occupancy rate rose to 58.2 percent compared to 57.4 percent the same month last year, and the year-to-date rate, now 53.7 percent, is above last year’s 49.7 percent rate, according to Springfield Convention & Visitors Bureau statistics.

“A healthy citywide occupancy rate would be somewhere in the neighborhood of 60 percent to 65 percent, and we are a good ways from that,” said CVB President Tracy Kimberlin, noting he expects the year-end rate to settle around 52 percent. “I think we’ll be a couple of percentage points ahead of last year, but still a long way from being healthy.”

For comparison, Overland Park, Kan., a city with a 2010 population of 173,000, recorded a 62.2 percent occupancy rate January–August. During that same time, hotels in St. Charles, a suburb of St. Louis with a population of 65,000, showed 65.3 percent occupancy. Columbia, a city with more than 100,000 residents, had an occupancy rate nearly equal to Springfield’s at 53.8 percent.

That doesn’t mean, however, that the city couldn’t benefit from a new hotel or two.

“It really depends on the type of hotel and where it’s located. Even in a market that is generally underperforming there are still pockets within the city where a hotel might do quite well,” Kimberlin said, adding that projects such as those planned near St. John’s Hospital and Bass Pro Shops Outdoor World may help the local market.

Terry Reynolds of real estate company C. Arch Bay is now working through plans for a five-story hotel across from the St. John’s campus. A second reading on bills related to the project is scheduled for the Oct. 31 Springfield City Council meeting. Following the bills’ first readings, Reynolds said no hotel partner had been named and there was no projected start date for construction. No one spoke against the plans at the Oct. 17 meeting.

Larry Whiteley, a spokesman for Bass Pro Shops, said there was nothing to report at this time on the five-story, 149-room hotel planned across from the Outdoor World. In October 2009, Springfield City Council approved Bass Pro owner Johnny Morris’ request to rezone the corner of West Cherokee Street and South Campbell Avenue to a highway commercial district.

Robert Stephens was one of seven council members to recently vote against expanding the floor-area ratio for an $8 million hotel proposal in the 1800 block of East Republic Road. The expansion would have allowed developer Earl Steinert, owner of two Hampton Inns in Springfield, to increase the number of rooms at the planned hotel. Without council approval, the five-story project has been put on hold, and Steinert said following the vote he was looking for a new location.

Stephens cited a low hotel occupancy rate in Springfield as one of several reasons he voted down the measure.

“I realized at some point that the developer has all the risk, but we’ve been in a down economy for several years and there doesn’t seem to be a lot of improvement,” he said. “Between 2007 and 2010, we’ve really ranged between 49.7 and 55.7, so we are anywhere between 10 and 15 points of what is considered healthy – and this is in an area that is noted for tourism.”

He pointed out that heavy opposition by nearby residents also led to council members not approving the Republic Road project. On the other hand, a lack of opposing voices at the first reading of the bills tied to the five-story project at the southwest corner of East Cherokee Street and South National Avenue could bode well for that development.

“If the hospital weren’t there, that location would never be considered for a hotel,” he said.

Another issue that comes into play, Kimberlin said, is whether a hotel will survive on existing demand or create its own room demand. He said if Springfield were to attract a full-service hotel, that could generate demand all on its own.

“Typically, limited-service properties do not generate demand. They simply take it from somebody else. On the other hand, full-service hotels with considerable meeting space can generate demand because they are booking conventions, et cetera, that would not otherwise be held here,” he said.

Recent findings by Hunden Strategic Partners recommend the city work to put a full-service hotel next to the Expo Center to draw more convention visitors here. The 185-page report calls for city leaders to “go big or go home” seeking public investments up to $55 million and private investment of more than $53 million.

City Manager Greg Burris said the 13-member Convention Attraction Task Force, which was established to assist city leaders develop a plan of action following the Hunden report, is now awaiting the results of a second report. Burris said at least an initial draft of the report should be presented to city leaders and the committee in about three weeks.

Burris said city leaders would look to possibly develop plans for a full-service hotel adjacent to the Expo Center after it hears the recommendations of the committee.

A deadline for construction of a 240-room full-service hotel by JQH Hotels had been set by the city for Sept. 30, 2008, and then extended to April 1, 2010, following an agreement between the company and the city that offered the vacant land to JQH Hotels with the promise of a hotel.

Burris said the city is currently considering buying the site for $1, a provision in the agreement if JQH Hotels missed the second deadline.[[In-content Ad]]

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