On Wednesday, the Vanguard had a discussion with the initiator of the petition against the Hyatt hotel proposal. The petitioners wish to remain anonymous until next week’s Planning Commission meeting on August 24, where the issue of the Hyatt Place Hotel will get its formal hearing.
During the course of the conversation, the views that have been presented by the Vanguard were disavowed and distanced.
As the petitioners stated in their formal statements, “We are running the online petition, not the people you have identified in your articles.”
They continued, “While the people you identified are entitled to their opinions, they are not in line with ours, nor are they in line with overall sentiment of the numerous households we have spoken with as well as online petition signers. While they do live in our neighborhood and have been invited to our group meetings to express their concerns, they in no way represent the greater initiative, sentiments, or outreach we are doing to educate our neighborhoods.”
They continued, “We are absolutely against any comments or ill will towards any of our neighbors including New Harmony. We will continue to remove any negative comments from our petition as we have been doing since the beginning.”
There are legitimate concerns that have been raised in the process that the city council and Planning Commission ought to deal with.
These concerns are the lack of current zoning to permit a hotel, the poor location for a hotel, the increase in foot and car traffic, the 24/7 operation in the back yards of some of the residents, the lack of restaurants in the area, and the lack of easy freeway access. And the ability of hotel occupants to see directly into neighbors’ homes.
While reasonable people may disagree with some or all of these stated concerns – they are part of a legitimate land use discussion.
While the Vanguard remains concerned about some of the comments that have come out in public comments, and emails that it has obtained, following our discussion with the petitioner, we are convinced that the initial statement in the petition was an innocent error, due to inexperience rather than reflective of malicious intent by the overwhelming number of residents.
At the same time, on the core issue of a hotel, we believe there needs to be a vigorous discussion.
The Planning Commission and especially the Davis City Council will have to weigh the concerns of the neighbors against the benefits to the community of the hotel.
Dan Carson, in his capacity as part of the Finance and Budget subcommittee looking at new revenues for the city, did a fiscal analysis of the project. He was not compensated for his work.
The following is the summary of his findings:
- The Hyatt House project would financially benefit the city and local agencies. For example, it would likely result in a net fiscal benefit to the City of Davis of almost $700,000 annually and one-time fiscal benefits exceeding $1.8 million. Yolo County, the Davis Joint Unified School District, and a local tourism district would also benefit financially from the project.
- The estimate of hotel tax revenues from the project is sensitive to assumptions about the occupancy and room rates generated from the new hotel. The actual outcome could be higher or lower than estimated, perhaps by a couple hundred thousand dollars, on an ongoing basis.
- The Hyatt House project is unlikely to financially undermine other existing or approved hotels.
- The new hotel is almost certain to expand the city’s overall hotel tax revenue base. City hotel tax revenues increased in recent years even in the wake of past hotel expansions by UC Davis outside of the city limits.
- Both the Hyatt House and a competing extended-stay hotel proposal may be able to move ahead in the Davis market, particularly if litigation over the Embassy Suites is resolved, allowing its conference center to move forward, and the growth planned for the UC Davis campus continues. However, this is a concern only if city policymakers determine that both projects meet written criteria adopted by the City Council, including the negotiation of development agreements with project applicants that could potentially provide additional benefits to the city from the project.
- If both extended-stay projects are found to warrant approval, city policymakers may wish to allow the private marketplace to determine, via its investment and financing decisions, whether both projects can proceed at the same time. In this event, the city should examine whether city ordinances and the development agreements provide the applicants sufficient flexibility to adjust the timing of their projects to ensure their success.
As previously noted, “PKF Consulting, the hotel industry experts retained by the Hyatt House project applicant, projected last year that the new hotel would eventually achieve 78% occupancy and an Average Daily Rate of $186 per room because of its high-quality construction, location near I-80, and brand affiliation. If that were the result, I estimate that city TOT revenues would be about $767,000 annually.”
It is, of course, not just the neighbors who have concerns about the proposed hotel. In a meeting with existing hoteliers, questions were cast about the validity of the PKF study.
PKF argues that at least three new sites can be “readily absorbed by the market,” and they find “occupancy is projected to increase to 67.0 percent in 2019 and further increase to approximately 70.0 percent in 2020 and 2021. It is at this level we project the Davis hotel market to stabilize. While this stabilized occupancy level is above the annual average occupancy level achieved by the Davis hotel market since 2007, it is in line with the year-to-date performance and is reflective of the growth occurring in Davis.”
Existing hotel owners are skeptical of these claims from PKF, and point to their own analysis that paints a very different picture.
They note that, while the occupancy rate has increased from 61 percent in 2012 to 67 percent in 2014 (the most recent data available), the rate varies by day and month. Basically, as indicated above, from Sunday through Thursday, hotels have trouble booking rooms, and it is only on the weekends, mainly Friday and Saturday, where hotels approach 70 to 80 percent capacity.
But even these are variable, depending on the time of the year, with the summer months generating heavy usage that falls way off during the late fall to early spring. In essence, there are only about five times during the year when the market is saturated – when UC Davis opens, Picnic Day, and during three separate graduations, in the spring, fall and for the law school.
The analysis notes that coupling additional hotels with the already-approved Embassy Suites would add about 328 rooms to the market that would have to be absorbed – the existing hotel owners do not see the demand generators at this time to justify that belief.
One the other hand, the city commissioned the HVS Consulting & Valuation report, which analyzed scenarios for the study performed for the Hyatt House and noted, “Based on the forecast, occupied room nights will have to increase by 40% over a two-year period to sustain a 65–66% occupancy level. Those figures are somewhat extraordinary, especially for a market that has yet to surpass 70%.”
However, HVS added that “although projected to be higher than historically achieved in the analysis completed by PKF, it is reasonable to assume that the entry of branded, high-quality hotels would have a positive impact on the rate structure of the market as a whole.”
HVS concluded that these projects “appear slightly aggressive but not entirely unreasonable.”
City staff writes, “Staff accepts the analysis that shows that construction of one extended stay hotel in Davis would benefit the City and the market by capturing room nights from visitors who are going elsewhere because they are seeking either amenities or a hotel brand that is not available here.”
“Additional rooms in an extended stay hotel could also complement the hotel conference center by accommodating overflow guests, provided there are mechanisms to address inefficiencies of shuttling meeting-goers,” staff adds.
However, staff concurred “with the HVS conclusion that there is not current capacity to absorb the rooms proposed for both the Hyatt House and the Residence Inn if they were to open within the same period of time.”
Where does that leave us? It seems to leave us with a question as to whether the city should allow the already approved Embassy Suites, which is being held up with legal suits, to be built and then assess the situation and add one hotel, or add both hotels – and if they choose to add one hotel, the question turns to whether the Hyatt location or the one on Mace is better.
These are all important considerations that both the Planning Commission and the city council will have to weigh in on.
—David M. Greenwald reporting