Wednesday, October 8, 2008

Hailey roots for new Ketchum hotels

Three high-end projects are in the pipeline


By TONY EVANS
Express Staff Writer

Hailey Mayor Rick Davis and Hailey hoteliers are speaking out in support of high-end hotel developments in Ketchum

If it's good for Ketchum, then it's good for Hailey and Bellevue—that's the message from Hailey Mayor Rick Davis when it comes to the prospect of building swanky new hotels in the north valley.

Davis attended a Ketchum City Council last month to express support for Jack Bariteau's proposed 73-room, four-star Hotel Ketchum project. Hailey hotel managers are also in support of the project, which they say will bring economic benefits to the south valley.

At a meeting last month, the Ketchum City Council unanimously approved a conditional-use permit for Bariteau's planned-unit development, giving the green light to move ahead with a three- story complex of guest rooms, penthouse condominiums and a two-story underground parking structure, as well as a restaurant, bar and retail space.

Ketchum officials estimate that Hotel Ketchum will bring $6.3 million in overall revenues to the city over the next 15 years, after adjusting for the impact to city services.

"Right now our valley needs some new money from outside," Davis said. "The type of people a four- or five-star hotel will draw to town will spend money while they are here. That money will eventually create new employment opportunities for people in Hailey and Bellevue."

Davis said most of the hotel's service workers still come from Hailey and Bellevue, and that money earned in Ketchum will be spent at hardware stores and grocery stores in the south valley.

"It will create more local-option tax revenues, more jobs and more local employment opportunities," Davis said. "Building the hotel will provide construction jobs until it is finished, but more importantly, it will provide service-worker jobs and managerial positions afterward."

The managers of the two biggest hotels in the south valley agree with Davis, saying what is good for the north is good for the valley as a whole.

Michael Frith, general manager of the 64-room AmericInn in Hailey, says a new hotel in Ketchum would not compete directly with his business. Frith says the bulk of AmericInn's hotel rooms go to business travelers staying in Hailey, including Power Engineers associates, Marketron people and others with business at Blaine County offices. He also sells a lot of rooms to private pilots and other staff associated with high-end visitors to the north valley.

"A fine hotel can help the reputation of a resort area. If you have a lack of hotel beds it can limit the amount of people and the type of visitors who come to town."

Frith says occupancy rates at AmericInn are down 8 to 15 percent from the same period last year, a trend he thinks could be offset by a development like Bariteau's.

"If there were more high-end hotels in the north, the airlines might add another flight, or we could get more private plane charters," he said. "In that case we will see more business from security and peripheral staff. Hotels can bring a lot of life blood to a community."

Wood River Inn General Manager Gene Olson also sees the possibility of a new hotel in the north valley as more of a prospect than a problem.

"We have a different clientele in Hailey," he said. "Some people come to town to ski, but mostly they are pilots and business travelers."

Olson said he gets a lot of construction company personnel at the Wood River Inn also, but not as many as last year due to the slowdown in the housing market. His occupancy rates for September were 22 percent lower than in September 2007.

"There has definitely been a decrease in the number of people coming to the valley since the beginning of 2008," he said. "If a new hotel in the north helps bring people to our valley, it has to be a good thing for the valley overall."

In addition to Hotel Ketchum, two other high-end hotel projects are in the pipeline for Ketchum. The Warm Springs Resort, which is currently at the city council level, is a 77-acre development northwest of downtown featuring a five-star hotel with 75 hotel rooms, 45 condominium suites, 30 fractional ownership units and up to 35 additional residences.

The proposed resort would also feature a nine-hole golf course with limited public access, 27 town homes, two estate lots, 25 villas and almost 48,000 square feet of workforce housing for 152 employees. The city of Ketchum estimates the resort will bring in $30.3 million over the first 15 years of development.

A planned-unit development application for the Ketchum Lodge is expected to be submitted to the Ketchum P&Z this month. The mixed-use hotel would be on the Simplot lot across from the Ketchum Post Office on Second Avenue and have 70 hotel rooms and 26 fractional and whole-ownership units, as well as a spa, restaurant, retail space and a central public plaza. The city of Ketchum estimates the hotel would bring in $7.4 million over the first 15 years.

But in these economic times, it is uncertain how many of these plans will come to fruition. Bariteau told the Mountain Express recently that he would have to raise private equity to pay for the $65 million Hotel Ketchum, which could take a year.

"The conventional debt markets for this type of project don't exist any more," he said. "The doors are closed."

Because of the difficulty in obtaining funding, the council granted Bariteau two years to commence construction, instead of the one year permitted by city ordinance.




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