SAG Presents Feasibility Study in Los Alamos, NM

No to Hotel, Yes to Conventions
Hotel/Conference Center: Added supply of rooms would glut the market
By Arin McKenna,
Wednesday, November 30, 2011 at 1:49 pm (Updated: November 30, 3:09 pm)

Photo Credit: Arin McKenna Tony Peterman, senior partner of Strategic Advisory Group, reviewed the results of a study Tuesday night.

Photo Credit: Arin McKenna
Tony Peterman, senior partner of Strategic Advisory Group, reviewed the results of a study Tuesday night.

A feasibility study conducted by Strategic Advisory Group (SAG) determined that a proposal by Trident Development New Mexico, LLC to build a 134-room Hilton Garden Inn with an 8,500-square-foot conference center and restaurant would reduce room occupancy for all hotels from approximately 55 percent to just over 45 percent, placing existing hotels at risk.

The consultants recommended against any project that increases the current supply of hotel rooms.

However, the study showed strong possibilities for community-wide economic development with a first-class hotel and conference center, which could be accomplished by an existing hotelier. The consultants suggested a plan for moving forward without inserting additional hotel rooms into the market.

Tony Peterman, SAG senior partner, and Partners Jerry McClendon and Dan Fenton made the presentation. They were directed to study five issues:
• Market demand for the project?
• Will it help local businesses?
• Will it hurt local hotels?
• Project a good fit for the community?
• What is the path or paths forward?

The consultants’ research included extensive interviews with every Los Alamos National Laboratories (LANL) department which schedules meeting events to surveying 134 State associations about their potential interest in holding events here.

The research projected that convention center use could create a demand for 13,900 incremental room stays per year, but that the relatively small population, lack of economic diversity and lagging tourism would create very little additional demand for hotel stays. To maintain even 55 percent occupancy for all hotels if 134 rooms were added, room occupancy would have to increase to 26,000, virtually double the projected demand.

The team also studied usage of current meeting facilities such as Fuller Lodge. The survey showed that meeting space was primarily used for county activity with less than 10 percent having out-of-town attendees, and that users pay below market rent. The team concluded there was little unmet demand for local groups, but projected a 40 percent loss of business due to the lack of convention facilities.

The survey of LANL meeting planners indicated they definitely wanted a new, modern facility. The lack of quality lodging and meeting space with a restaurant/bar for after-hours was the main hindrance to both LANL and other groups holding meetings and conventions here. The lab estimated that Los Alamos was losing 3,000 individual business room nights annually due to quality concerns.

SAG consultants concluded that in order to move forward, Los Alamos must address three critical issues: product quality, destination appeal and pro-active group sales and marketing. (Los Alamos essentially has no proactive group sales effort.)

The team proposed that an existing hotel in a central location be converted to a 90-room high-quality hotel with the proposed 8,500-square-foot/550-person conference center.

SAG projected this would create 13,900 additional room stays, and that hotel occupancy for all existing hotels would increase to 65 percent.

SAG stressed the need for a top quality facility that could compete with meeting/convention facilities in Santa Fe and Albuquerque. They emphasized Buffalo Thunder Resort and österreichisches online casino’s ability to attract groups with its size, opulent design, state-of-the-art meeting rooms, two luxurious ballrooms and the flexibility to accommodate a range of groups.

When asked how an existing hotel could be converted to such a high standard, Peterman said it would probably mean razing a current facility and building from the ground up. He suggested an alternative would be converting an existing hotel to another use, such as residential property, and building in a centralized area.

SAG also said that all the area hotels would have to upgrade their facilities in order to attract large group business, noting that inconsistent lodging quality deters group sales.

The consultants believe this approach would garner lost business without placing existing hotels at risk, increase local business activity, improve destination appeal and spur other downtown development. They laid out a three-step process for building toward long-term economic growth.

The presenters said to carry out such a plan, the county would have to decide who takes on the risk of such a project, and whether to encourage the project through incentives not only for the main facility but for upgrades to other hotels.

“This has to fit into the county’s long-term vision,” Peterman said. “It’s going to take some political fortitude.”

The team urged the county to develop a dedicated, proactive sales staff, whether or not a new convention center is built, to promote the county’s assets as a destination.

Kevin Holsapple, executive director of Los Alamos Commerce & Development Corporation, was impressed by the study. “I think they are dead on about what we need to do to move forward. The question is, should we use public money to accelerate this? Whatever we do should have a broad impact for the community,” Holsapple said.

Holsapple was also excited by how closely the suggested plan mirrored a proposal made by the Creative District committee.

“I think there’s a real opportunity here, but we’ll have to work hard to make something of what we learned about the possibilities,” Holsapple said.

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