GRANDVIEW — The City paid for NaviRetail to conduct a hotel feasibility study, for which results were recently released to the City Council.
At the April 23 meeting, council members learned the study of a location on West Wine Country Road, next to the courthouse, is a desirable site for a hotel.
There’s a big “but” in the findings.
“Based on our market analysis, there is not sufficient market support for the proposed limited-service hotel. Our review of investor surveys indicates equity returns ranging from 12.7 percent to 26.1 percent, with an average of 18.8 percent. Based on market parameters, the calculated return to the equity investor, 5 percent, is below the average and the range of market-level returns given the anticipated cost to build a hotel of this type, estimated to be approximately $6,800,000,” the report delivered by Casey Kidd of NaviRetail said.
Having heard the report, City Administrator Cus Arteaga said, “It sure doesn’t look like it would be profitable.”
The company looked at the potential competitors to such a hotel, the newly constructed Holiday Inn and Great Western Horse Heaven Hills in Prosser, and the Great Western Grapevine Inn and Quality Inn in Sunnyside.
There has been growth in the local hotel industry, but the addition of the Holiday Inn’s 75 beds has absorbed some of the demand, the report states.
“Notable expansions and relocations of companies to the area in 2018 bode well for Grandview, which seeks to attract additional businesses in the future. However, it is important to note that no major business expansions were in the pipeline at the time of this report,” the authors of the report wrote.
Arteaga said there is work to be done. Instead of a hotel being among several amenities the city believed to be a priority, other amenities likely need to be in place before a hotel can be constructed.
However, he’s been reaching out to companies and stakeholders to see if there is a need for a hotel, “… what kind of participation can we project.”
If investors move forward with the construction of a 2-story hotel with 65 rooms, it is anticipated to open January 2021.
“That date will be set back,” Arteaga said, referring back to a the analysis given to the City Council.
To be feasible, NaviRetail said it would need incentives from the city and/or county to offset construction costs, and “Grandview would need to attract more local employers, particularly employers that utilize overnight lodging, for a hotel of this type to remain successful in the long term.”