Editorials

With rooms sitting empty, KC should stop handing out incentives for downtown hotels

A look at five hotels opening this year in downtown Kansas City

Kansas City's first downtown convention hotel since the 1980s is two years away, but the corridor from the River Market to the Country Club Plaza is seeing a resurgence with five hotels opening this year and another 10-plus planned to open by 2020.
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Kansas City's first downtown convention hotel since the 1980s is two years away, but the corridor from the River Market to the Country Club Plaza is seeing a resurgence with five hotels opening this year and another 10-plus planned to open by 2020.

Kansas City’s tepid convention and hotel market offers important lessons for the local political community.

Kansas City does not need more hotel rooms downtown. Since 2007, developers have added more than 1,700 hotel rooms in the convention district, according to figures compiled in a report for Visit KC, the group charged with drumming up convention business.

Another 1,600 rooms, including 800 in the new $325 million Loews convention hotel, will become available during the next two years.

So far, hotel operators have been able to keep room rates relatively stable, which reflects moderately firm demand for a place to stay. But the occupancy rate falls short of what’s considered healthy and is below the occupancy rates in Denver and Nashville.

That’s a concern.

“We have done a great job of developing supply,” said Visit KC chief executive Jason Fulvi at a recent meeting. “At this point, it might be wise to take a pause, let demand catch up and reevaluate.”

He’s correct. It’s obvious Kansas City should publicly declare a moratorium on subsidies or incentives for any hotel project for at least the next two years, until well after the new convention hotel opens.

We supported that project and the incentives that went with it. The hotel will be a plus for downtown, providing jobs and convention business. It’s wrong to conclude the hotel is a failure even before the doors open.

But it’s also clear that the hotel boom is just about over. Kansas City should understand the state of the convention market, and the impact of the new hotel, before it hands out any more incentives.

Visit KC says it needs more money to attract conventions. If it can raise that money privately, fine.

But asking taxpayers — even visiting taxpayers — to pay more for the visitors bureau is problematic. One of the reasons for the slump in hotel occupancy is the reluctance of business executives to travel here, and Visit KC can’t fix that.

The long-term lesson from this hotel saga is that Kansas City needs to rethink its approach to incentives for all types of development.

Convention business is appealing for any city. Who would turn down out-of-towners who arrive with money to spend on meals, rooms and entertainment? A robust tourist business grows the size of the city’s economic pie.

But other cities see that, too. They’re building hotels and downtowns and tourist-friendly projects. The result is a convention-related arms race that Kansas City appears unlikely to win.

That should sound familiar. The metro area has long been locked in a border war over incentives for employers, factories and retail developments. No one is winning. Taxpayers are losing.

Creating a vibrant, growing city is possible, but it requires patience and a commitment to basics: safe streets, good schools, cultural amenities, transportation options, progressive and inclusive residents. There is no magic dust that policymakers can sprinkle over projects to make the city healthier or more attractive to outsiders.

The new mayor and City Council will need to understand that reality when they take office.

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