By WALLY LIMBURG
Wally Limburg is the principal of Strategic Retail Advisers in Ketchum.
Unless Ketchum and Sun Valley's air transportation issues are resolved, the area will continue to have economic problems, regardless of how many hotel projects our City Council approves. With today's global economic meltdown, the Warm Springs Resort applicant will not have much hope in getting financing for his proposed project. The failed Tamarack project in McCall is going to taint any lender from wanting invest into a large development within a ski resort area in Idaho, especially with the area being snuffed out by a dwindling air transportation service. This year we lost the Horizon Airline service from Oakland. SkyWest has also cut its service from Salt Lake. Given the problems with our airport and the continued economic plight of the airline industry, this service could get worse, not better.
We share many of the same issues that all small markets do when it comes to the economic drivers created by airlines servicing their market. Horizon Airlines canceled service to Butte, Mont., this year, so they hired Meade & Hunt to see how they could try to get more or retain existing airline service. The study was eye-opening as to what the airlines' outlook is toward small markets. The study concluded that carriers have and will continue to reduce air service in smaller markets, that small hub markets only accounted for 7.8 percent of airlines' total business and there are no orders for turboprop planes in the foreseeable future with less than 70 seats, including from SkyWest and Horizon Airlines.
With the future airline issues we face, the City Council needs to factor in what hotel projects really stand a chance of getting built if we want the airlines to support us. There will be formidable financing problems on large commercial projects for the next three to four years. There are four active hotel projects on the boards for the Ketchum area. Hotels are needed, but they need to be in the right place, with the right product. The two hotels planned for downtown are aimed directly at solving some of our major retail problems. Now that Sun Valley Co. has announced its intention to build a luxury hotel at the base of River Run, our City Council has a difficult decision to make.
If too many projects get approved, we stand the chance that Sun Valley's hotel project could get canceled, based on having too many rooms in this market. But if we could get a ski-in, ski-out luxury hotel at the base of the River Run, then the Ketchum-Sun Valley status will soar as a world-class ski town destination. With the Warm Springs Resort's limited chances of receiving financing, approving this ill-conceived project could be harmful. The City Council needs to weigh its options when considering approvals for the Warm Springs Resort. A 'yes' vote may negatively alter the future of Sun Valley. Since Mr. Holding's other business is Sinclair Oil Co., there may not be the same financing issues as the other applicants have. The Warm Springs Resort applicant is asking for too many variances within a residential neighborhood that wants no part of a high-rise building development.
Sun Valley Co. already contributes to airline supplements for the Wood River Valley. With a new hotel at River Run, those supplements would probably continue, and at increased levels. The Warm Springs Resort applicant has suggested at the public hearings they are counting on private planes to get their guests to our valley. I believe having continued and improved public airline service is what is best for the economic stability of the Ketchum-Sun Valley area. If we really want to spur economic growth and create more jobs, we need to support a realistic project that will have a chance of happening.
