While the Kansas City MO City Council spends money the City doesn't have on studies for a 1000-room downtown convention hotel- a story in the Monday- March 1st edition of The STAR's business section puts down in black and white why the hotel is a BAD idea right now.
In that story- reporter Kevin Collison writes: "Hotels are a particularly troubled property type. Out of the $497.4 million in distressed assets in Kansas City reported by Real Capital Analytics, more than half, $259.1 million, are hotels."
"Hotels are particularly vulnerable to downturns in the national economy because they depend on daily room rentals, not long-term leases, said Jeff Marvel of Marvel & Associates. And business travel has been down substantially because of the weak economy."
"“It’s very unusual to find an unleveraged hotel,” Marvel said. “Most are still in financing or refinancing.”"
"And when revenues are down, “borrowers cannot make loan payments,” said Herb Warmbrodt, whose Leawood firm advises clients on hotel transactions. Most lenders would rather work out new payment arrangements with hotel owners than foreclose on properties that would be difficult to sell."
The folly of the convention hotel and the staggering additional debt the city's taxpayers would be subject to is the brainchild of KC-MO Councilman Ed Ford.
He and the several other council supporters (also behind the annexation of a proposed subdivision north of K.C.I. airport which thankfully failed) had best get their collective heads out of their behinds before the next election.
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