Plans will go forward for a new Avid Hotel north of Interstate 70, despite pleas from an existing hospitality chain that more competition will hurt other hotels in town.
The Hays hotel industry is already suffering, said Leigh Purdy, operations manager for B&L Motels Inc., a business of Bruce and Linda Weilert, which owns Sleep Inn, Comfort Inn & Suites, and Quality Inn.
At a public hearing Thursday evening at City Hall, Purdy urged Hays City Commissioners to deny Saffron Hospitality LLC’s request for the city to grant a Community Improvement District, which allows developers to recover some construction costs through an added sales tax on their rooms.
Without a CID, Saffron developers have said their $7.05 million project for a four-story Avid Hotel would be dead.
Purdy argued that over the past 12 months, the Hays hotel market is down compared to the Kansas market and the I-70 corridor Kansas market, both of which are up. “It means we’re not receiving our fair share,” she said.
New hotels price low to attract and build a customer base, Purdy said, causing a trickle-down effect that forces all hotels to lower their prices.
“Why would travelers pay $120 to stay at a different mid-scale property that’s 10 years older, when a new hotel is only priced at $100?” Purdy asked.
The biggest culprit in the Hays market slowdown has been the 2018 opening of TownPlace Suites by Marriott, she said.
“So still a year and a half later, we are still feeling the effects of that opening,” Purdy said.
Current hotel inventory is 1,031 rooms, she said, while the peak was 1,119 rooms before the closing of the Hays Ambassador Hotel & Conference Center, 3603 Vine.
“At this moment in time, there’s a large number of rooms currently in the pipeline for Hays,” said Purdy, citing Hilton Garden Inn adding another 100 rooms, Avid with 79 more, and two hotels, one of them a MainStay, at a planned travel plaza at I-70 Exit 157.
“Of course they’re welcome to build this hotel, obviously they can do what they like,” Purdy said. “But I don’t think it should be at the expense of the taxpayer.”
Mayor Henry Schwaller IV corrected Purdy, saying “the residents of Hays will not be paying any taxes to support this facility.”
A CID adds two cents sales tax on every dollar a traveler pays for a room. The tax goes to reimburse the developer for the hard costs to build the project. The Avid developers have estimated a CID covering their hotel, with a planned indoor swimming pool, would raise $622,836 over the CID’s 20-year life.
Hard costs are everything above ground, including landscaping, lighting, infrastructure and utilities, sidewalks, and the parking lot and entrance and exit drives. Developers are reimbursed on a pay-as-you-go basis and no city bonds are issued.
Two cents would make the sales tax in the CID 10.25%, not including the city’s transient guest tax. The city has authorized CIDs on other hotels north of I-70, notably Hilton Garden Inn, TownePlace Suites and Holiday Inn Express.
The city gets a half-percent administrative fee, said city finance director Kim Rupp. Saffron must have its certificate of occupancy by July 1, 2021, Rupp said, and there are remedies to the city if Saffron defaults and fails to perform.
“If they have no business, the city of Hays is not going to bail them out,” Schwaller told Purdy. He said the city welcomes new business.
“We’re not going to keep them out of town because we don’t want competition,” he said. “This is important; we’re down rooms. In this segment, we believe this is very attractive.”
City Commissioner Ron Mellick pointed out that CIDs are available to any developer whose project meets the qualifications, even existing hotel properties if improvements are made. CIDs align with the city’s economic development policies, Mellick said.
Many times during the year there’s a shortage of hotel rooms in Hays, he said, citing sporting events, FHSU graduation, Oktoberfest and Wild West Fest, forcing travelers to stay in WaKeeney and Russell.
“We hear those complaints. We don’t drive the market, the public drives the market,” Mellick said. “This 2 percent is paid only by the people who use the hotel.”
City Commissioner Sean Musil, who owns Paisley Pear Wine Bar, Bistro & Market in downtown Hays, favored Saffron’s request.
“As a very small business owner in town, I have competition almost daily,” he said. “Do you like it? Absolutely not. But it also, I think, sometimes makes you better.”
City Commissioner Sandy Jacobs agreed, saying “I don’t think I’m probably ever going to do anything to keep business out of our community.”
Avid, an InterContinental Hotels Group brand, is planned for just west of Old Chicago, on a 2.1-acre lot south of 43rd St., immediately south of Walmart, between Mopar and 43rd streets.
Saffron’s investor group was formed in March 2019 and has six members. They are Dr. Arun Devakonda, Pratima KC and Radhika Ponugoti, all of Oklahoma City; Sunil Kumar Mallavarapu, Herndon, Va.; Dr. Annapurna Veerayyagari, Great Bend; and Kumaravel Thirunavukarasu. Srujan Vusi, with an address of the Rodeway Inn, 3404 Vine St., is listed as manager of Saffron Hospitality.