By Shane Tucker
The City Council will consider two hotel projects at its October 25 meeting – the Hyatt House (“HH”) and Marriott Residence Inn (“MRI”). The Planning Commission (“PC”) reviewed these two projects in recent weeks, recommending MRI but not the HH. Unfortunately, the quality of review and evaluation by the Planning Commission was disappointing at best.
The City Council will be evaluating the hotel projects using a set of criteria that were developed earlier. At the time of the HH PC meeting, there was some confusion about the use of the criteria by the PC, and there was no commentary from staff regarding these criteria. This left the PC members to attempt an evaluation on their own. One Commissioner complained that he was thrown a curve in trying to evaluate these criteria because he wasn’t a professional planner. Commissioner Hoffman was very frustrated by the lack of staff guidance and input on the criteria: he ultimately voted against the HH project despite stating that he liked the project.
Commissioner Marilee Hanson provided her own synopsis of the criteria and hotel. Unfortunately, her presentation was riddled with inaccuracies and omissions, and the proponent was not allowed to correct the inaccuracies. In my opinion, the lack of input from staff on this criteria was a significant factor in the decision by the PC. Note that by the time of the MRI meeting, staff was much more aggressive in highlighting the evaluation criteria.
In order to facilitate a better and fair evaluation, I have attempted to complete the criteria for both hotel projects, and the results are included below. I used the documentation submitted by proponents and city staff for factual information, as well as commentary from the PC meetings. Many of the distances and routes were measured using Google Earth.
In cases of where opinion or judgement is required, I have used my experience in commercial real estate (for reference, before moving to Davis, I worked 15 years as a commercial real estate lender, and for several of those years I ran a national commercial real estate lending business which evaluated thousands of projects and originated hundreds of loans backed by various property types across the country. For transparency, I have no financial or vested interest in either of these specific projects, or more generally, commercial real estate in Davis).
I conclude that both hotels are good projects, and in my view, both need to be built. In my experience, I have rarely seen a hotel market as underserved for business travelers and upper income family travelers. One only need look at the success of the Hyatt Place (market occupancies and rates increased AFTER it was built) to understand how underserved this market is. Many Davis-bound business travelers are staying in West Sac, Sacramento and Woodland.
I have first-hand knowledge of this, as several clients and friends who come to visit in Davis decide to stay in hotels in surrounding towns. Our downtown hotels/motels are tired, lack appropriate amenities and frankly, suffer from lack of investment, leaving their physical plant and customer service severely lacking. In addition, hotel brands like Hyatt and Marriott have significant customer loyalty programs which drive occupancy to their hotels.
Best Western, Holiday Inn and the like have customer loyalty programs, but they are far less successful in driving occupancy decisions. In sum, the current hotel stock in Davis is not capturing a significant portion of its potential customer base. Projects like the HH and MRI will create substantial additional hotel room nights at higher rates than our current hotel stock.
If the council were to decide that only one of these projects should be constructed, I believe an honest evaluation of the criteria put forth by the council demonstrates that HH is the better project. Proximity to major demand generators, visibility from I-80, amenities (restaurants, access to bike path and greenbelt, outdoor exercise venues), sustainability, hotel development and management experience, and on-site services are all better for HH. While MRI’s access to I-80 is better than HH, the other locational and amenity advantages of HH negate the MRI’s access advantage.