For the week of August 21 - 27, 2002

Decline of hotel 
rooms continues

Property values outweigh rental earnings

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By GREG STAHL
Express Staff Writer

As a resort area, Sun Valley-Ketchum is becoming an oxymoron.

The number of hotel rooms in the northern Wood River Valley is slipping. From 1999 to 2002, Ketchum lost 111 hotel rooms and a difficult-to-surmise number of condominiums.

Following recent losses, the valley can host approximately 6,000 guests in hotels and condominiums, according to the Sun Valley-Ketchum Chamber and Visitors Bureau (CVB). That number will slip even more when Elkhorn closes its 132-room hotel this fall.

When Elkhorn closes, the lost hotel rooms will constitute 26 percent of the north valley’s hotel bed base.

In Ketchum, the Christiania Motor Lodge, Heidelberg Inn and Ketchum Korral all were recent casualties. Ski View Lodge, which was sold this summer, also closed just several weeks ago.

But hoteliers and Sun Valley’s marketing specialists contend the closures don’t translate to a lack of demand for hotel rooms. Lodging properties are simply becoming much more valuable than the lodges.

"I don’t think it’s the demand as much as it’s the real estate," said CVB Marketing Specialist Carrie Westergard. "It’s business for these people. They can sell these properties for much more than they can rent them, unfortunately."

Westergard said the continuing trend will be a continuing decline in the number of short-term accommodations. And if properties are not taken out of hotel markets, they will probably be rebuilt as high-end establishments.

"It’s probably not even feasible to think that a lower end hotel would be starting up in the area, because of the cost of the land," she said. "We won’t be marketing to the lower end. These resorts are getting expensive."

In Ketchum, a rags-to-riches redevelopment scenario could occur at the historic Bald Mountain Lodge site, which occupies an entire city block on south Main Street. It is no longer feasible to maintain the current use there, said the site’s owner, Ketchum Attorney Brian Barsotti.

"We’re kind of stuck," he said. "It’s not a winning proposition right now, so we need to do something with it."

For the last eight months, Barsotti has been working with Ketchum city leaders to work out additional creative solutions to the hotel enigma. The city already allows hotel developers to build at densities greater than all other buildings, except for ones that include affordable housing.

Nonetheless, last winter, Barsotti simultaneously submitted plans to build a large, very high-scale hotel at the Bald Mountain site and to revamp some of the city’s ordinances to allow time-share ownership of a percentage of a hotel.

Both proposals are still preliminary, and public comments thus far have been relatively neutral. However, Barsotti said the next incarnation of his hotel plans may show another floor that has not been previously presented. It’s part of a juggling act that balances financing, building height, building mass and public tolerance.

"I know that height is something that concerns the public in Ketchum," Mayor Ed Simon said, raising what he said is the ultimate question: "Are we willing to sacrifice view corridors for height and hotel rooms?"

In cases where lodging properties have not been redeveloped, property owners are using the former hotels as affordable housing, another of the Wood River Valley’s vanishing commodities.

Thunder Spring LLC bought the Heidelberg Inn in Warm Springs several years ago to house construction workers at the massive project, and the new owners of Ketchum Korral are renting the historic lodges in relatively affordable price ranges.

Though the Heidelberg and Ketchum Korral are filling a need, they are not helping contribute to the Wood River Valley’s biggest economic engine.

CVB Executive Director Carol Waller said in a prior interview that the resort community is heading for trouble if the decline continues. Short-term accommodations are at the core of any resort community’s economy, she said.

"Without them, tourists don’t stay. Stores remain empty. The resort community becomes less of a resort, and city sales tax collections drop."

But Barsotti may not be the northern Wood River Valley’s only prospective hotel developer.

The Sun Valley Co.’s spokesman, Jack Sibbach, said the resort does not have imminent plans to build a new hotel, but "I know there’s been talk."

Sun Valley owns large amounts of undeveloped land at the River Run base of Bald Mountain and at the resort in Sun Valley.

"I don’t see it happening in the next three or four years," Sibbach said. "I see it happening at the village before I see it at River Run."

Owners of the Clarion Inn in Ketchum presented plans more than a year ago to build a bigger, fancier hotel, but neighbors did not receive the plans well, and the inn’s representatives have fallen silent. But Ketchum Acting Planning Administrator Harold Moniz said Clarion representatives may submit plans again.

Still, the economics are simply not attractive, Ketchum Realtor Dick Fenton said.

"It’s a hard market. The tough thing for the new guys is the land costs are driven by the opportunities to do the mixed use, office and residential and retail. It’s a tricky proposition," Fenton said.

Simon said he believes the overall trend will continue to be down.

"Over the years, we just keep losing more and more hotel rooms. I don’t think we have (hit bottom). We’re probably only somewhere in the middle."

 

The Idaho Mountain Express is distributed free to residents and guests throughout the Sun Valley, Idaho resort area community. Subscribers to the Idaho Mountain Express will read these stories and others in this week's issue.