Sunday, April 01, 2007

Akron: Increase Hotel Taxes for the Knight Center?

A 1% increase in hotel room tax will be requested to fund repairs the Knight Center. Since the Center opened in 1994, stuff needs to be replaced, and apparently no one has been planning for repairs and upgrades. 1% isn’t that much, but does offer some food for thought.

The first thought is that either the 1% isn’t really one percent, or that the BJ just doesn’t do math: ”The 1-percent hike would raise the cost of the average $58 hotel room by about 65 cents a night.”. Last time I checked, 1% of $58 was 58 cents. Either the actual increase is about 1.12%, or the application of the tax isn’t very straightforward, or the average price per night of a hotel room in Summit County is $65, or the BJ just doesn’t do math.

The second is this remarkable admission:

“When the center opened, it had about $2 million set aside for capital repairs, she [Susan Hamo, Knight Center president] said. Last year, Hamo said the center finished about $180,000 over its $4 million budget.

She said the center was never designed to operate at a profit, but rather to spur economic growth. The center, she said, is meeting its projected goals.”

Why doesn’t the Center have the goal of at least making enough profit to support needed capital improvements? If it’s not making money, how do we know if it’s meeting its projected goals, or if those goals are worthwhile?

Especially since the cost of building the Center was $33 million.

At least the 58% occupancy rate doesn’t seem that bad (assuming that it’s not just a one year spike). The Charlotte, NC Convention Center is reporting occupancy rates in the upper 40’s – mid 50’s:

“In fiscal 2005, which ended June 30, the convention center occupancy rate was 39%, down from 52% in 2004 and 48% in 2003. CRVA Chief Executive Tim Newman says a 50% rate is considered ‘decent,’ and a 60% rate ‘pretty healthy.’

The center's occupancy rate for fiscal 2006 so far is 42%.”

If a 60% utilization rate is considered ‘healthy’, you have to wonder how much incremental economic activity and growth these things really generate.