Friday, November 13, 2009

Downtown Nanaimo Hotel

Where Is the Business Plan
To Support a Downtown Hotel?

It is good to see some common sense surfacing at City Council and that not all councillors think it is a great idea to just throw some more money at this project.

This is an open letter to Mayor Ruttan and council with regards the building of a downtown hotel and why it is thought to be the magic bullet that will save the convention centre.

If I wanted to open a popcorn stand as a business and in order to do so had to go to the bank to borrow $5,000, you can bet they would want me to have a well thought out business plan put together to support my loan application. And so they should.

Where is the City of Nanaimo's business plan to support the idea that a downtown hotel is somehow going to attract all these large conventions we are told we are missing out on?

Can anyone either at City Hall or at the VICC tell us how many more rooms have to be available to attract these large conventions? Would the proposed number of 176 rooms be enough to ensure the success of future convention bookings? Would all those rooms have to be held open for conventions or would some of them be used for non convention visitors?

Of the 900+ rooms already in Nanaimo, what % do the hotel operators make available for conventions? Surely they don't turn away their regular customers for the occasional convention.

What kind of market studies have been completed to prove that a hotel would ever be a viable business in downtown Nanaimo ? Would it be successful if the convention business never materialized? How many conventions would have to be booked to ensure the success of a hotel?

These are just a few questions I have never heard an answer to and until they are answered there needs to be some serious thought given to just how much more money is going to be committed to the convention business in downtown Nanaimo.

How much more taxpayers money is this council willing to use to 'sweeten' the deal to draw a hotel to town? You can bet if the business were viable hoteliers would be lined up at city hall around the block wanting to build.

Private money built the new Ramada Inn on N. Terminal and to my knowledge they got no special concessions from the City. Private money knows where there is opportunity and apparently they just don't see the opportunity in downtown Nanaimo at this time.

The VICC is said to cost $800,000.00 per year to keep operating, I suspect that if you were to remove rental fees which are paid by the City taxpayer for different events, ie: city coucil meetings in the Shaw auditorium, the burden to taxpayers would exceed $1,000,000.00 easily.

The convention centre was a divisive decision in the first place, and history is proving the naysayers to have been right in their opinions. We went from a $12,000,000.00 convention centre on the site of the old Malaspina Hotel to the $52,000,000.00 convention centre (after a questionable referendum) to at least a $72,000,000.00 convention centre without a business plan that could have been privately financed.

To my knowledge that $72,000,000.00 was never put to tender by the City and clearly Millennium/Suro was in the driver's seat all along. You might also question the wisdom of the keepers of the public purse when you realize how much this whole deal favoured Millennium.

The city never went looking for Millennium, they came to the city. Did the city have competetive bids before embarking on this very expensive project? You will remember that the fellow who introduced Millennium to City Hall, sued Millennium for a finder's fee and was awarded a few hundred thousand for his efforts. Clearly the courts thought this was a pretty sweet deal for Millennium.

How did we go from $12 million to nearly $80 million in the course of a few years for what is arguably a business that is in decline? Who were the cheerleaders for this project? Are some of them still on council wishing to just keep forging ahead regardless of the cost?

This whole project is in need of a serious, sober second look and some well researched plans must be set in place to determine if the convention centre is ever going to be the best use of this grand new building.

At the very least there should be a business plan that a bank would accept to finance a popcorn stand.


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