Convention Hotel Documents Claim it Will Double Hotel Business

Consultants for the proposed downtown convention hotel are telling us that if we build a new hotel we will almost double our hotel traffic. That may seem crazy, which is probably why the report doesn't make this claim in clear terms, but if you dig though a just-released two-year old report, the argument is clear: build it and they will come.

In Figure 1-5 (page 7) of the report, available below, we learn that at the time of the report, the number of hotel room nights sold owing to the convention center (accommodated demand) was 157,159. On the next page, Figure 1-6 shows the expected annual growth rate for convention-related hotel room business regardless of whether we build a hotel. It ranged from 4% in 2013 to 2% a year in 2018 and beyond. Those assumptions are themselves questionable, as this same report indicates (Figure 1-1) that annual growth rates in 2011 and 2012 were 0.3% and 2%, respectively.

Laying that aside, lets look at how much new business a new convention hotel will bring. In Figure 1-7 (page 9), we see two things: base demand and induced demand. Base demand is the current demand discussed above plus the projected annual increases. This is the growth without a new convention hotel. Induced demand is the projected increase in business due to a new convention hotel. The report does not detail how induced demand is calculated.

In 2021, the base demand is 199,105, roughly 42,000 more than we're getting today. The induced demand is 108,000 room nights. These are both questionable assumptions. Add them together and you get 150,000. The consultants were telling us that if we built a 1,000 room convention hotel we'd almost double our hotel business–from 157,159 room nights in 2013 to 307,105 in 2021. Is that reasonable? Even in the short term, the consultants estimated that by 2017, we'd see an increase of 113,000 room nights over 2013. That is a 72% increase in room nights just because we built a hotel.

Does anyone believe these claims? Are the annual growth rates reasonable? Is the induced demand rate reasonable? On what was it based? Was the previous City Council aware of these reports and projections? Has anyone checked to see if the 2013 and 2014 annual convention growth projections were met? No hotel project should be seriously contemplated until these basic questions are answered.