Bond concerns spark debate over convention center, hotel tax
From the CENTRAL PENNSYLVANIA BUSINESS JOURNAL:
…Apart from the bond payments, the convention center is performing as or better than expected, [Kevin Moloy, Executive Director of the LCCCA] said. It has beaten its budget targets the past two years and is generating on average 1,500 “spillover” room-nights a month, he said, or 18,000 a year — in other words, nearly 50 rooms a night for other hotels in the area to supply…
[Stephen Sikking, a partner in Manheim Township's Eden Resort & Suites and the Fulton Steamboat Inn in East Lampeter Township] offered the following analysis: Assuming the Marriott’s occupancy equals the county average of 60 percent, its 299 rooms yield 65,481 room-nights a year, he said.
Even if half of that is new business, that still means 32,740 room-nights were spent at the Marriott instead of other county hotels, he said. Setting those against 18,000 annual spillover room-nights yields a net loss by other hotels to the Marriott of 14,740 room-nights…
“All the other hotels are free market. This one (the convention center and Marriott) is being subsidized,” Sikking said…
Click here to read the full article.
EDITOR: Molloy, a good guy trying to defend that wasn’t of his making, blames the recession for the drop off in tourist business to the county. He is wrong on two accounts:
1) He ignores what hoteliers understand, there is a need for constant reinvestment in renovating rooms and public areas in this highly competitive business industry. The Hotel Room Sales Tax has both discouraged business and lowered earnings, because for the most part the tax is absorbed by the hotels in order to compete with other regions. (A 5% increase in taxes is the same as a 5% increase in price.) The result is a lack of earnings available for updating. In general the Lancaster hotels have grown worn and shabby over the half decade of hotel room sales tax. This has discouraged discretioniary visits and affected the entire tourist industry and the overall local economy.
2) Another important factor was the sponsors were so greedy and so bull headed about ramming through a project of dubious merit that the LCCCA entered into reckless financing terms. The result has been interest rates and fees that currently exceed what would otherwise be the market by well over a million dollars a year.
The sponsors continuous misled the public and arguably the State by representing market studies as feasibility reports. At the prodding of the sponsors, the city appointed directors of the Convention Center Authority then ignored the legitimate feasibility study by PKF commissioned by the County Commissioners. PKF Consultants accurately predicted what has occurred. It didn’t take rocket science!
Let us both hope and pray that the time doesn’t come when the City is called upon to bail out the Marriott Hotel.
WHEN is LNP going to be honest with us? Lancaster City and Lancaster County taxpayers are going to have a rude awakening in the near future. WHEN is Penn Square Partners going to be held accountable by our elected officials? WHEN are we going to be shown the ‘real numbers’ behind the Marriott Hotel? WHEN is this nightmare going to end?
Questions, Questions, Questions…………we derserve some ANSWERS!!!!!!!!!!!!!!!!!!!!!!!!
The Penn Square Partners’ hotel business revenue and profits are a secret as tightly guarded as if they were a matter of national security, even though the hotel building they occupy is owned by taxpayers, and all of their meeting space from which they collect revenue is actually a part of the convention center. Their only “lease” is payments on a $24 million Lancaster City-guaranteed construction loan, their only equity is $11 million in unspecified terms; considering they occupy a hotel structure which cost in excess of $76 million to construct, that is quite a deal for them. Yet they still claim business confidentiality, even though the majority of the assets which they profit from were paid for by taxpayers.
Given the inappropriate secrecy, there is no telling what the Penn Square Partners might end up doing.
Now it makes perfect sense. The project clearly takes more rooms than it adds. A hotel tax increase is therefore definitely in order.
Where is your evidence for the sweeping generalization that “In general the Lancaster hotels have grown worn and shabby over the half decade of hotel room sales tax. This has discouraged discretioniary visits and affected the entire tourist industry and the overall local economy.”?