Brenden Moore
The State Journal-Register
There was mostly praise from members of the Springfield City Council last week for the developers of a proposed hotel and entertainment center that would be built at Fourth and Washington streets.
If built, the development — 95 hotel rooms, 17 luxury apartment units, ground level and rooftop retail space, a “one of a kind” rooftop bar facing the state Capitol, about 200 public parking spaces and entertainment center — would replace a dilapidated, city-owned parking garage and a privately owned building that now houses the Club Station House nightclub.
The ownership group, DK COLLECTIONS SPI, is seeking up to $7.65 million in tax increment financing for the project, which is expected to be approved by the council on Tuesday.
Still, there were some lingering concerns expressed. Among them, Ward 7 Ald. Joe McMenamin said he was worried what more hotel rooms would mean for Springfield’s existing stock of downtown hotels.
It’s a fair point and one that I have heard from a few readers since news of the development broke. Can Springfield handle more additional hotels?
In a statement emailed to me on Friday, the Springfield Hotel and Lodging Association, which represents about 38 hotels and motels in town, acknowledged “that this opportunity is good for the downtown district” and that “if successful, it could bring in more development to boost the local downtown economy.”
The group, however, expressed some concern that with a flat occupancy rate, it would lead to more hotels cutting from the same pie and thereby not increasing tax revenue for the city.
“Without citywide occupancy going up, we are not going to see an increase in overall tax revenue. The purpose of the SHLA has always been to promote conventions and tourism to the City of Springfield, while, at the same time, protecting a positive business climate in the city within which we operate,” the association writes. “For this venture to be successful, the (Springfield Convention and Visitors Bureau) and the hotel industry has to be able to use the hotel tax dollars from our overnight guests to reinvest in our efforts to solicit new business.”
According to data from the Springfield Convention and Visitors Bureau, the Springfield region’s occupancy rate has been about 55 percent each year between 2016 and 2018. The average daily room rate was $86.21 in 2016, $87.30 in 2017 and $86.59 in 2018.
The revenue per available room, an industry metric that combines occupancy rates and average daily rate, was $49.47 in 2016, $48.78 in 2017 and $47.66 in 2018.
Despite the concerns, SCVB director Scott Dahl said the relatively small number of rooms proposed for the hotel means it should not have as significant of an impact.
SCVB data shows the city’s supply of hotel rooms lower than in past years. In 2017 and 2018, 3,899 rooms were available, down from 4,005 in 2016.
The number of rooms available will likely climb back north of 4,000 in the coming years. About 90 rooms will be added when SpringHill Suites opens at Legacy Pointe later this year while developers of the proposed downtown hotel hope to have it open by September 2021.
Dahl told council members the bureau’s goal is to reach 60 percent occupancy, a number last achieved in 2013.
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Joe McMenamin for Ward 7 