A Tale of Two Hotels: Why We Need Both

External view with privacy screen/ rendering by HRGA
External view with privacy screen/ rendering by HRGA

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.

Tucker-Hotel

About The Author

Disclaimer: the views expressed by guest writers are strictly those of the author and may not reflect the views of the Vanguard, its editor, or its editorial board.

Related posts

51 Comments

  1. Grok

    what a sad attack on the planning commission.

    “the proponent was not allowed to correct the inaccuracies.”

    Actually at one point during the hearing the developer actually interrupted a planning commissioner and was allowed to talk for more than 5 minutes in interruption. If the developer had had something to say, thy would have had their chance, but not indication was made to the commission that they want ed to talk. Probably because these alleged inaccuracies do not exist.

     

    1. Davis Progressive

      if you watch the video of the planning commission at that hearing, it was clear that they were confused, unsure what to do and that definitely played into the vote.  i think katherine hess was completely incompetent in her handling of this hearing and unnecessarily sewed the seeds of confusion.

      1. Tia Will

        DP

        if you watch the video of the planning commission at that hearing”

        I guess I could. I was just hoping to be spooned with bullet points or a comparison chart as he did to promote his viewpoint. But hey…..at least I’m honest.

      2. Grok

        If you pay attention to both the Hyatt and Marriott hearings you will see that indeed there were very real questions about how best to apply the Council hotel resolution during the Hyatt hearing. Any confusion about the resolution was cleared up during the Marriott hearing though and it became clear the planning commission had appropriately applied the Council resolution during the Hyatt hearing. The planning commission applied the Council resolution in exactly the same way during the Marriott hearing with very different results. the planning commission did their job appropriately and does not deserve the attack this author makes on them.

        The author claims the developer somehow did not have  a chance to make their case to the planning commission, but the reality is the developer had three separate opportunities over the course of 3 Planning Commision meetings to present their plans and make their case to the planning commission, including a onsite presentation. Then, after all of that opportunity, the developer still rudely interrupted a planning commissioner mid sentence and was allowed to talk for over 5 minutes, and then was further allowed to bring up another speaker. After the developers had more than fair opportunity to make their case the planning commission voted not to recommend the “Hyatt” project to the City Council

        By comparison, the Marriott developers were able to make the case for their project in 20 minutes in one meeting and received a unanimous approval.

  2. Tia Will

    After reading this well formatted comparison of the two projects, I am wondering why there was not an equally well organized discussion of what the alleged inaccuracies in the commissioners analysis were, and what the accurate information is ?  I am wondering if it would be possible for Mr. Tucker to provide such an analysis either in the comments section here or as a follow up article ?

    Also, while I found most of the comparison to be fair and probably accurate ( I have not checked out the distances and other factual data myself), I found section F to be quite subjective.

    The statement “negative impacts” ……”fully mitigated” would likely not be agreed with by the neighbors. Likewise of the “neighborhood benefits”, at least the first two ( noise reduction, and increased safety) were either not felt important or disputed by the neighbors. Also, I would like to point out that “benefits” are beneficial only if they are desired by the neighbors, not if they are thought to be desirable  or “nice to have ” by someone who does not live in the neighborhood.

    So while I am very appreciative of Shane Tucker’s effort at providing a factual and for the most part unbiased comparison, I would have preferred that the objective and subjective portions of this comparison be separated out clearly.

    1. Mark West

      Tia Will:  “while I found most of the comparison to be fair and probably accurate…I found section F to be quite subjective.

      If you think Section F is too subjective, ignore it and look at the rest of the analysis.

      I believe that we need both projects and the CC should act to approve them both. If they are only going to choose one, however, then even if I ignore Section F in this analysis, the Hyatt House project is clearly the best fit for the stated criteria and the project that should be approved.

        1. Tia Will

          ChamberFan

          We need revenue and the hotels are the only revenue proposal on the table”

          Depending on how one views the hotel proposals, this comment could be seen as advocacy for them, or a plea for more proposals, or both.

           

  3. Tia Will

    DP

    you seem to be asking for a lot”

    I can’t tell whether you are writing tongue in cheek….or whether you really believe that I am being too demanding. It seemed really straightforward to me.

  4. Tia Will

    Mark

    If you think Section F is too subjective, ignore it and look at the rest of the analysis.”

    A fair point if I believed that all of our decision makers would do the same. The only reason that I felt it needed calling out is because a casual look could make it seem that what he was presenting in this section was as objective as the rest while it clearly is not.

    I am not in opposition to either of these projects. I just believe that what is objective should, on both sides, be clearly separated from what is subjective. I do not object when you or anyone else sees that I have blurred this line and calls me on it, and don’t believe that anyone else should object either.

    1. Mark West

      “I do not object when you or anyone else sees that I have blurred this line and calls me on it, and don’t believe that anyone else should object either.”

      I’m not objecting to your questions, I’m objecting to your apparent need for a ‘perfect’ analysis. We should all be able to look at Shane’s work and determine for ourselves what is objective and what is subjective and make an overall assessment of his conclusions. I have done so and considered his conclusions to be sound, based on the criteria set forth by the City Council. I don’t see where subdividing the objective from the subjective into separate reports would make any difference in that final assessment. Your request is an example of the sort that results in our community’s ongoing ‘paralysis by analysis.’ We don’t need another analysis, we need to be smart and make a decision that best meets the needs of the entire City.

  5. Grok

    This chart is lacking credibility for claiming all impacts created by the “Hyatt House” are mitigated, and instead claiming a long list of so called benefits to the neighborhood.

  6. Marina Kalugin

    Who is Shane Tucker, the writer of this op ed piece?   I scrolled around looking for the details about this person, before I waste my time to read it…and not a single identifying notation that I could locate….

     

    PS> why don’t you give up and pick daisies for a while…

  7. Matt Williams

    Setting aside an individual’s biases and alliances about either of the two projects, what Shane Tucker has provided here is an excellent tool for focused (and hopefully productive) dialogue about the two proposed projects.  Shane deserves all our thanks in putting in the effort to create this tool.  Tia’s point about objectivity/subjectivity is very reasonable, so I’m going to take the time to try and parse the information Shane has provided.

    Evaluation Criteria A — all the information provided appears to be both objective and accurate.

    Evaluation Criteria B — all the information provided appears to be both objective and accurate.

    Evaluation Criteria C — all the information provided appears to be both objective and accurate.  I would add that the oleander plantings in the median of I-80 will further reduce visibility of the Residence Inn for eastbound travelers.

    Evaluation Criteria D — all the information provided appears to be both objective and accurate.I personally would reword the last two sentences of the first cell/box for the Residence Inn to read “Difficult access to protected bicycle pathways.  2nd Street is an unprotected bicycle environment.”

    Evaluation Criteria E — all the information provided appears to be both objective and accurate.

    Evaluation Criteria F — as Tia has noted the information provided in this three row section appears to be a combination of both objective and subjective information.

    o o o The information provided in the first of the three rows appears to be both objective and accurate.

    o o o The information provided in the second of the three rows appears to be subjective for the Hyatt House and incomplete for the Residence Inn.  Expanding this section of Shane’s effort would make it a better and more useful document.  Obtaining information about this section for the Residence In  would also make it a better and more useful document.

    o o o The information provided in the second of the three rows would (in my opinion) be improved if it were broken into three sections.  The first section would be Community Benefits.  The second would be Neighborhood benefits.  The third would be Optional Neighborhood Benefits.  The first bullet point falls (in my opinion) into the community benefit category.  It is very clear that many people in the immediately adjacent neighborhood would prefer the lot to remain as is, or at least be developed in a less intense fashion.  The second bullet point falls in the Neighborhood Benefits category.  The third bullet point would appear to be a Neighborhood Benefit, but it would be good to know more about the details of this benefit.  The fourth, fifth and sixth bullets fall into the Optional Neighborhood Benefits category.  This addresses Tia’s concern.  There is no “selection” bias associated with reduced I-80 traffic noise for the neighborhood, but there definitely is “selection” bias for the bar and meeting rooms benefit.  I personally believe those benefits will be used and useful, but not universally so.

    Evaluation Criteria G — all the information provided appears to be both objective and accurate.

    Evaluation Criteria H — all the information provided appears to be both objective and accurate, but it would be helpful if the Residence Inn project would step up with their missing information.  As currently presented, Criteria H appears to very substantially weigh in the favor of the Hyatt House proposal.

    Evaluation Criteria I — all the information provided appears to be both objective and accurate.  However, it also should be noted that while the Hyatt Place on the UCD campus is not in the City, it does provide a positive synergy for the Hyatt House because both franchises earn points in the Hyatt Hotels rewards program.  Given the Hyatt Place’s current average 86% occupancy, it is reasonable to expect that travelers turned away by the Hyatt Place due to full occupancy would not be forced to find rooms in other cities, but rather in Hyatt Place’s sister hotel in Davis.

    Evaluation Criteria J — all the information provided appears to be both objective and accurate.

    Evaluation Criteria K — all the information provided appears to be both objective and accurate.

    Evaluation Criteria L — all the information provided appears to be both objective and accurate; however the residence Inn has not as yet had an opportunity to respond to the Planning Commission recommended changes.

    Evaluation Criteria M — all the information provided appears to be both objective and accurate.  Here too it would be helpful if the Residence Inn project would step up with their missing information.

    Evaluation Criteria N — all the information provided appears to be both objective and accurate.

    Evaluation Criteria O — all the information provided appears to be both objective and accurate.

    1. Ron

      Matt:

      As usual, the more “important” question is whether or not the best questions (criteria) are being asked.

      For example, why is it considered to be “important” to be close to Davis Diamond Gymnastics, PlayFields Park, or Community Park? Conversely, how important is it (for visitors) to be near Target?

      Also, how much easier/closer is it to gain access to/from the proposed Residence Inn location, from I-80?  How much easier is it to drive down Second Street to reach the city center (and the University), from the Residence Inn location (thereby avoiding the dreaded “Richards/Olive intersection”, as well)?  How “important” are these considerations, vs. the criteria that was presented in the article?

      How many visitors would actually ride bicycles to the city/University (despite what some might hope for)?

      How many people are opposing the Residence Inn proposal?  Also, how many hotels should be built (presumably, to benefit the city at this time) considering that other existing hotel occupancies could be affected if overbuilt (resulting in limited or no gain for the city)?

      1. Ron

        Matt:

        I also wanted to ask:

        Did your committee ever examine the impacts of hotel occupancy tax exemptions for some visitors (e.g., those who plan to stay longer than 30 days)?  (You’ll probably recall that we had a long, extended conversation regarding that ordinance.  In the end, you seemed to agree that such visitors would not be subject to the occupancy tax, if they make such arrangements with the hotel.) Presumably, this might be more of an issue with the Residence Inn, since they specialize in long-term stays.

        I don’t remember if there are also some specific groups that are exempt from paying occupancy tax (e.g., federal employees). I seem to recall that state employees were not exempted.

        Also, any consideration of the differences in occupancy tax (between hotels located within the city, vs. the University)?  (And specifically, how that might provide the University with at least some competitive advantage.)

        1. Ron

          Matt:

          Just to clarify, I recall that we determined that occupancy tax would not be collected (from Day 1 of a visit), if a visitor makes plans with a given hotel to stay longer than 30 days.

        2. Matt Williams

          That is also my understanding Ron.  The key question is what proportion of the total stay days will be filled by guests staying over 30 days.  Do you have an estimate of what that proportion will be?

        3. Ron

          Thanks, Matt.  No – I have no idea.  I would think that hotel chains (such as Marriott) might have this information, for their other locations.  (Or, perhaps other cities that host such extended-stay hotels.)  I would think that your committee might examine this.

        4. Mark West

          Ron & Matt:

          A question to you both…why do you think it matters if some visitors stay beyond the 30 days?

          We will receive zero new tax revenues if we don’t build the hotels and the analysis by the consultants shows that tax revenues increase if we do build them. If some fraction of the visitors stay beyond 30 days and are not subject to TOT it will have little impact for the City since total tax receipt will have gone up? The only way that I can see it having an impact is if the majority of the visitors were to stay beyond 30 days, which seems entirely unlikely. Is there any reason to believe that the consultants would not have considered that likelihood in their analysis?

           

        5. Ron

          Mark:  Ron & Matt:  A question to you both…why do you think it matters if some visitors stay beyond the 30 days?

          For accuracy, regarding the benefit to the city.  Not sure if the consultants fully considered this (or other possible exemptions).  Perhaps more of a concern with the Marriott, since they specialize in long-term stays. And again, no tax would be collected starting with the first day of occupancy, if plans are made with the hotel to stay beyond 30 days.

          Your overall point is probably true (some benefit to the city overall, assuming demand is there and doesn’t displace existing hotel occupancy within the city).  (I suppose it would reduce demand in nearby cities or at the hotel located on campus – assuming that those staying at a new hotel in Davis would otherwise stay in a nearby city or at the hotel located on campus.)

          Not sure if consultants are always fully “up-to-date” regarding competition from AirBnB, etc.  (I don’t remember if there is a successful effort to tax such arrangements.)  Sort of reminds me of what’s happening to traditional taxicab companies, when faced with competition from Uber, etc.

        6. Matt Williams

          Yes Ron the FBC did look at all the impacts on hotel occupancy tax revenues, as well as all project revenues, and the result was that the FBC unanimously voted to change original report wording from:

          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.

          to:

          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 hundreds of thousands of dollars annually and one-time fiscal benefits exceeding $1.8 million.

          and then forward that report on to Council.

          Mark, I believe your question is answered by the action that the FBC unanimously voted to take.

      2. Mark West

        Ron:  “As usual, the more “important” question is whether or not the best questions (criteria) are being asked.”

        The criteria were set by the City Council.

        Ron: “Also, how many hotels should be built (presumably, to benefit the city at this time) considering that other existing hotel occupancies could be affected if overbuilt (resulting in limited or no gain for the city)?”

        A reasonable question, which Shane addresses.

        “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.”

        “Many Davis-bound business travelers are staying in West Sac, Sacramento and Woodland.”

        “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.”

        “I conclude that both hotels are good projects, and in my view, both need to be built.”

        Business travelers are already avoiding many of the downtown hotels and staying in surrounding cities. Opening up higher quality hotels in town will allow the City to capture many of those stays, bringing them into town. As Shane points out, the market occupancy and occupancy rates in town went up when the Hyatt Place opened, unfortunately, the City does not receive taxes from Hyatt Place. In addition, the price point of the new hotels will also be greater than the existing hotels, increasing the amount of tax collected by the City per stay.

        To the question of whether the new hotels will impact the existing ones, it frankly isn’t the City’s responsibility or authority to try to protect the existing hotels from competition.

        1. Ron

          Mark:  “To the question of whether the new hotels will impact the existing ones, it frankly isn’t the City’s responsibility or authority to try to protect the existing hotels from competition.”

          It absolutely is in the city’s interest to determine the impact on existing hotels (from which occupancy tax is already collected). Unfortunately, it is not in the interest of the proposed hotels to uncover/examine this impact.

        2. Mark West

          Actually, we are talking about two different questions. I agree it is in the interest of the City to determine how much tax it will collect in total due to the new hotels. That is a completely different question than determining the impact on an existing hotel. If the total tax receipts go up the City benefits even if the receipts from an existing business go down. The City’s interest is in the total tax collected, not in protecting the revenues of an existing business.

      3. Matt Williams

        Ron, those are questions you will have to ask the members of the City Council.  They are the ones who established the 15 criteria.

        With that said, your questions open the door to a question I have that you can help me with.  Specifically, how would you personally weight the 15 criteria?  For example if the total aggregate weight of the 15 criteria equals 100 points and all 15 criteria are equally weighted then each one would have a weight of 6.67.

        1. Ron

          Matt:

          Those are good points, as well.

          I’d probably (also) look at it from the point of view of a potential visitor.  In other words, how appealing would one location be, vs. another location?

          For me personally, I prefer easy vehicular access to freeways and destinations, when staying at a hotel.  (I’d consider congestion, as well as distance.)

          If there aren’t too many visitors planning to stay beyond 30 days (thereby avoiding the occupancy tax), I’d say that the proposed site of the Residence Inn is a “no-brainer”, in terms of a better and less-impactful location (vs. the Hyatt location). Seems better for (both) visitors and residents.

          I don’t know – perhaps Marina is right, as well (regarding other options these days, such as AirBnB, Bed-and-Breakfast location in Winters), etc. (In terms of actual demand.)

  8. Marina Kalugin

    and who is Shane?   is he a developer or an investor in the hotel business?  or an interested party who likes to analyze things…

    Perhaps some of the no side may want to do a similar analysis of the issues that he fails to mention.

    You know, the real reasons why that hotel doesn’t belong in that spot   🙂

    1. Matt Williams

      Marina, I could be wrong, but I believe Shane is a walnut farmer.  To the best of my knowledge he is not currently either a developer or an investor in the hotel business.  He definitely is a citizen who is interested enough in the overall well being of Davis to have devoted the time needed to write today’s article.  I met him once back in 2014.  He talked to me about how his walnut ranch was a very peaceful and satisfying choice of a new career after the intensity of his 15 years in the national commercial real estate lending business, where he evaluated thousands of projects and originated hundreds of loans  backed by various property types across the country.

      I agree with you wholeheartedly that Grok and the other people on the No side should do a similar analysis of the issues they feel Shane ahs failed to mention.

      What do you think the real reasons are that a hotel does not belong in that spot?

      1. Grok

        The Planning Commission did an excellent analysis of both hotel proposals. I would suggest that would be a better place to look for a better analysis of the 2 proposals. The video is available on the City of Davis website.

        I have to take extreme objection to the idea that I am somehow on the “no side.” “no side” of what? Building hotels in Davis? Hardly, I advocated for the Marriott. If you mean to suggest that I am on the “no side” of the Hyatt, the way you even state it seems to show your bias for the project since it omits the Marriott hotel.

        1. Matt Williams

          Since Marina trotted out the “no side” term I will leave it to her to explain her use of the term.  You have shown through your many posts on the hotel subject that you have an excellent command of the detail associated with that subject.  Therefore your name was the logical one at the head of the list to translate Marina’s suggestion into action.  I wouldencourage you to identify more with Marina’s proposed action than her casually thrown out label.

          Regarding your Planning Commission suggestion, an aggregate transcript of their two meetings would be very helpful.  Most citizens don’t have either the time or inclination to navigate through the City website to find those two videos and then try and discover where in the video the assessment of the Council criteria is discussed.  However, if they are provided with a written document that makes their effort both easy and rewarding, they will be much more inclined to devote the time.  Shane’s effort wasn’t specifically limited to the Planning Commission dialogue, but like the Planning Commision dialogue it follows the structure of the 15 criteria that the Council provided.

          Are you willing to follow Shane’s example and provide a structured written version of the two Planning Commission discussions?

  9. Marina Kalugin

    because it is against the zoning as was set up in the General Plan for decades…..

    and why would a walnut farmer care so much about a hotel going into that particular spot in Davis?

    I don’t agree another hotel is needed at this time….we have faculty recruitments and international speakers show up on a last minute basis in our department at UCD and we have never ever had a problem accommodating a soul in a nice hotel/motel in Davis…. except when someone was coming on a commencement weekend…

    that was once in over 46 years that I have been affiliated with UCD>  that we had to look for a room elsewhere…and in that case we housed the couple in a lovely B&B in Winters… they loved it and it was perfect they said….they didn’t even wnt to move into the place in Davis which opened up at the last minute

    Other times we have had couples who preferred to be in Sac where the younger, though not undergrad, and sometimes gayer, action is…

    now with so many airbnb options and so much else, new hotels are not needed and for long term there are other great options like VRBO and so on.

     

  10. Marina Kalugin

    most of the folks that do the op-eds actually include a sig line to explain who they are… ….and you, Mark West, should do the same.

    I don’t have time to wade through reams of nonsense any longer….I have staff for that now…

    But they are way busier with many more urgent things than propaganda disguised as legitimate research or op-eds..

     

  11. Ron

    Matt:  “Ron, those are questions you will have to ask the members of the City Council.  They are the ones who established the 15 criteria.”

    Just to clarify, I’m assuming that the council created the (general) 15 criteria (A – O above), but not the specific sub-categories/analyses listed in the article above.  The sub-categories/analyses can probably be debated ad nauseam.

      1. Ron

        Matt:

        I don’t think it matters what you call them.  But, it’s misleading to assume that the city created the “data points”.

        As noted in my earlier comments above, I questioned the inclusion of some of the data points in the article, while leaving out others.

        To answer your earlier question, no – I don’t think it’s appropriate to weight all categories (or data points) equally.  For example, I’d rate vehicular access to a freeway (and destination points) higher than other categories.

        I’d also consider neighborhood opposition (or lack thereof).

        1. Matt Williams

          Who assumed that the City created the data points?

          I agree with you 100% that all 15 of the Council criteria should not be equally weighted.  What I was asking you for was how you would weight those 15 criteria.  I proposed the scale of 100 because most people relate to that kind of scale.

          Since you weight Criteria D (the access characteristics associated with the site location) higher than the other categories, how much higher than the 6.67 equal weight value would you give that category?

    1. Matt Williams

      Eileen, do you have any data to support your belief in the “one additional hotel now but not two” argument?

      The following objective, public record data illuminates actual changes in the hotel room supply demand over the period from 2009 through present.

      (1) The 2009 TOT revenues received by the City of Davis were $912,456

      (2) the UCD Conference Center on Old Davis Road opened in October 2009

      (3) The Hyatt Place on Old Davis Road opened in March 2010 with 75 rooms, which was expanded to a total of 127 beds in March 2014

      (4) The 127 beds of Hyatt Place represented a 25% increase in hotel beds in Davis from 379 beds to 506 beds

      (5) In the 5-year period after the Hyatt Place opened, the City’s TOT revenues increased over 57%, more than double the percentage beds increase.

      (6) When you add in the equivalent TOT revenues from the Hyatt Place the aggregate increase goes to over 80%.  That’s an 80% revenue volume increase from a 25% increase in beds.

      Why did a 25% increase in supply produce an 80% increase in demand?

      I believe the first reason is the highly visible arrival of the Hyatt Place and Convention Center on the UCD campus.  It raised awareness within both the Commercial and the Meeting & Groups segments of the availability, quality and value of Davis hotels.

      I believe the second reason is the increase in UCD enrollment from 30,338 in 2009-2010 to 36,104 in 2015-2016, which mean many more parent visits to Davis each academic year.  If you assume one hotel stay day per enrolled student per year (some will not visit the campus at all, some will stay one day, some two days and others will visit multiple times) then 5,766 additional enrolled students means a 3% increase in the 2014 Davis hotel occupancy of 176,473 occupied rooms.

      I believe the third reason is the increase in UCD applications from 51,298 in 2009-2010 to 79,930 in 2015-2016, which mean many more parent visits to Davis each academic year.  If you assume one hotel stay day per applicant family (some will not visit the campus at all, some will stay one day, some two days and others will need two rooms) then 28,632 additional applicant visits means a 16% increase in the 2014 Davis hotel occupancy of 176,473 occupied rooms.

      I believe another (largely untapped) factor is the substantial amount of money UCD currently pays through its Accounts Payable Department for Faculty and Staff to go to out of town conferences and meetings (the Groups and Meetings segment) .  Hyatt Place and the new UCD Conference Center have created an environment where some of those conferences and meetings can and do take place here in Davis.

      1. Grok

        Matt, your posts are usually very calculated and rely on facts, but the one above states again and again that it assumes and is based on beliefs. It seems out of character for you. You have 4 paragraphs that start with “I believe.”

        1. Matt Williams

          Grok, you clearly did not read the demarcation sentence in the middle of the post, which says “Why did a 25% increase in supply produce an 80% increase in demand?”  All the points that appear above that question are straightforward objective facts.

          Since there is no way for anyone to know for a fact the answer to the very important demarcation question, transparency mandates adding the words “I believe” be included before each of the “Why?” discussion points that follow the question.

    2. Shanetucker

      Eileen –

      That’s an interesting  point for discussion.  First, let’s be clear that it is inappropriate to characterize as fact the statement that Davis needs only one additional hotel.    That was the opinion  of a respected hotel consulting firm.  Another respected  hotel consulting firm concluded that the market could absorb two additional hotels.    Each of those those opinions were concluded assuming that the Embassy Suites would be open Jan 1 2017, which is certainly  not the case.  In fact, based on the information available to me, there is considerable doubt that the Embassy Suites will be built anytime soon.    Finally, our experience with PKF and HVS was that they were very good at providing historical and current operating information in many markets, but were generally conservative in their forecasts.

      Based on the information available to me, my opinion is that the HH and MRI should be built.  Historical performance of this market indicates that we need additional rooms.  Further, the room night demand growth being generated because  the growth of UCD and businesses like Mori Seki, Schilling and those in the  Research Park area is  likely to continue.   Finally, the addition of highly branded, extended stay hotels will create new room night demand that will fill a currently unaccommodated demand for extended stay format (not currently in Davis) and associated with customer loyalty programs for Hyatt and MRI.  As I mentioned in the article, I’ve experienced this first hand with friends and clients who chose to stay in surrounding cities  because of the generally lower quality rooms available in Davis  (the most recent example was a couple who came to visit and stayed in Natomas at the Courtyard  – their first stop the next morning before joining us for lunch? – UC Davis to explore as a potential college for their daughter).

      Additionally, I think back to our priorities in decision making as a commercial real estate lender.    The source and amount of equity capital being invested in a project is a great indicator of its viability (not perfect, but a strong indication).   While I am not privy to the amount of equity being invested by the developers, each of them appear to be  experienced investors and project managers  (although in a direct comparison, the Hyatt developers  get the nod because they have demonstrated experience and capability  in the hotel sector).  Regardless, if these developers are putting capital at risk and moving forward in a market with characteristics like the Davis area,  all else being equal, I’d be favorably  inclined as a lender to provide financing to these projects.

      Hope that helps.

  12. Marina Kalugin

    yes, I really do not see the demand, but even if there were a demand for one, it should be better located…with proximity to eating places…..

    like on the 113 exit near the sutter hospital and the fast food joints and not too far of a walk across the freeway to the marketplace etc…….easy on and off also

     
    too bad that developers who only want a bargain and a profit do not choose to pay more for a location that is way more suitable

    the city planners, commission and council are supposed to be watching out for those kinds of things…. like suitability with the general plan and such….and especially the wishes of the citizens…

  13. Tia Will

    and especially the wishes of the citizens”

    I think that Marina has this factor right. What is too frequently overlooked in this discussion is the wishes of the existing citizens. This goes far beyond the individual minor preferences such as desire for or against a restaurant in close proximity to ones home. These are preferences that were established in prolonged and thoughtful processes to develop our current zoning and guidelines. When developers purchase land and hang their hopes on planning by exception, there is an implicit disregard and in my personal view, disrespect, for all of the previous wishes, plans, and expectations ( since these guidelines are rules for planning, not mere suggestions) that have been developed and upon which others in the community have based their decisions on where to live.

    If developers, and others in the community, rightfully desiring new opportunities and new revenue sources want to change the zoning and guidelines, then this should be done by a comprehensive process that involves all of the community who desire to participate. It should not be based on the current composition of the city council and the cynical process of “counting to three” that I have heard described.

     

    1. Biddlin

      “What is too frequently overlooked in this discussion is the wishes of the existing citizens.”

      Not all that long ago, the “existing citizens’ wishes” were that only WASPs be allowed to buy homes in most communities. How much deference is due such a perspective?

    2. Frankly

      The purpose of zoning is “to promote the health, safety, morals, and general welfare of the community, to protect and conserve the value of buildings, and encourage the most appropriate use of the land.”

      Note that nothing in that definition says zoning is to satisfy the wishes of existing citizens.

      What entitled egotistical brats we have become.  We don’t own the land.  We are not investing any of our own money.  Yet we believe we should have the right to dictate how that land is used to satisfy OUR wishes.  Where does that perspective come from?

      I was thinking back to high school and those few classmates that were wired as the bossy kids attracted to making rules for everyone else to live by.   It seems that Davis has attracted all of them to live here.

    3. Matt Williams

      Tia, the wishes of the citizens are that our streets are well paved, our parks and buildings are well maintained, our retiree costs are affordable, and our taxes are low.  In 2007 when the most recent effort was made to formally update the wishes of the citizens in the General Plan, all four of those citizen wishes were happening.  Now, none of those four citizen wishes are happening.  How do you factor that reality into the decision-making equation?

Leave a Reply

X Close

Newsletter Sign-Up

X Close

Monthly Subscriber Sign-Up

Enter the maximum amount you want to pay each month
$ USD
Sign up for