Mixed views on need for hotel space in Janesville
JANESVILLE — Stan Jones understands why a new hotel often is linked to new commercial developments in Janesville.
After all, the city lost about 25 percent of its hotel rooms when the Ramada Inn and neighboring Oasis Motel were bulldozed in 2007 to make way for the new Menards.
But even though some think Janesville has a shortage of hotel rooms, Jones—a 33-year veteran of the local hotel industry—said Janesville has an adequate supply, particularly given a down economy that has diminished corporate travel and discouraged leisure travelers.
Last fall, Hendricks Development Group proposed a commercial development that included a hotel for property it owns on Fulton Street near Interstate 90/39.
Another developer had plans for a project that included two hotels at the Pontiac Drive site Menards vacated.
And there’s long been speculation about a downtown hotel.
“The thinking is that there aren’t enough rooms, especially with the Ramada and Oasis being torn town,” said Gale Price, the city’s manager of building and development services. “The local hotel market has certainly tightened with the number of rooms reduced, and competitiveness has increased.”
Mark Membrino of HDG said there’s still strong interest in the Fulton Street hotel project, which stalled as credit markets tightened.
The project at the former Menards site fell apart for several reasons, including cold feet on the part of the anchor retailer.
As it stands, Janesville has 13 lodging establishments that pay 8 percent of their room revenues to the city in the form of a room tax. Together, they have 777 rooms.
In 2007, they paid more than $800,000 in room tax, which roughly translates into room sales of about $10 million.
On its face, a $10 million market is appealing to outside hotel developers.
But the devil’s in the details, said Jones, who is part of a group that built the Holiday Inn Express and Janesville Conference Center in 1994.
“I know there are developers looking, and one even wanted to partner up with us,” Jones said. “But the community-wide average occupancy is what’s telling about this market.”
On average, local hotels sell about 55 percent of their rooms on any given day.
In 2007, for example, if every room in the city had been rented every day of the year, the local hotel market would have peaked at about $18 million, assuming a $65 nightly rate that those in the local industry say is a sound average.
The city’s room tax numbers for 2007 show that the hotel revenues of $10 million translated into an occupancy rate of 54.5 percent.
It’s been said about the industry that a hotel makes money at 60 percent occupancy. At 80 percent, it makes good money.
“That’s kind of an old cliché, but it’s fairly accurate,” said Jones. “You have to factor in development costs, and the cost of construction, even for a mid-price hotel like ours, has doubled since we built.”
The local market didn’t simply wake up one morning in 2007 with 250 fewer hotel rooms. The Ramada had been in decline for years before it was razed, selling only a small percentage of its available rooms.
But there are certainly times when the city could use the extra rooms, said Christine Rebout of the Janesville Area Convention & Visitors Bureau.
“In July, August and September, I’d love to have those rooms back,” she said, noting that Janesville often accommodates overflow visitors to Madison and Rockford, Ill. “But when you look at where we are now, I’m worried about those that we have surviving.”
Jones agrees with that assessment of the highly cyclical business.
Last year, occupancy at the Holiday Inn Express was somewhat down, while revenue was somewhat up because of higher room rates.
“And then in November, we just hit a wall that’s continuing now,” he said.
He expects the bleakness to continue this year at his hotel, which caters more to corporate travelers.
“Corporate travel is down, and that’s something that’s easy for companies to cut because it goes right to the bottom line.”
On the leisure side of the ledger, Jones noted that last weekend was one of the flattest he’s seen in Janesville.
“I just don’t believe the community needs additional rooms,” he said.
Jones knows that sounds self-serving, but there’s a flip side.
“I bring this up with my group, and we discuss it all the time,” he said. “If there was a need, we’d be doing something.
“We just don’t think more rooms are warranted.”
Feb 16, 2009 at 10:37 p.m.
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Okay, JohnDoe, that was a fair response. I too would hope that investors would see this as a good place to put their money, but hotels are just too cyclical and trailing. They won't restart an economy and they probably won't recover occupancy until some point after the rest of the economy begins to improve. I don't think that's telling someone what (not) to do with their money, it's just stating some aspects of the business that those people certainly know better than you or I.
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For the record, I still think that a hotel is the ideal use for the old Menards property. It's just too hidden to be good for retail.
Feb 16, 2009 at 6:03 p.m.
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If "you" build it they will come!
Most of all a waterpark hotel! That would be a good investment for a private buyer!
Feb 16, 2009 at 5:28 p.m.
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Theres an idea, instead of our proposed outdoor waterpark why dont we combine the hotel and waterpark idea and like others have said have a resort that families can go to in winter and summer-- it would provide more jobs and save on gas costs for families in southern wisconsin to travel.
Feb 16, 2009 at 5:25 p.m.
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In my opinion instead of expansion, in the hard times you should look at the quality of the hotels, their locations and the access to them as well as the appeal of amenities. I think providing better service and quality as well as a good location make a better recipe to help fill the vacancies in the harder economic times. It would probably cost less and bring in more revenue then spending money on more hotels.
Feb 16, 2009 at 4:29 p.m.
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My point was...and still is...with all of the impetus to stimulate the economy, it's kind of silly to make the statement "This just isn't the time to consider expansion."
Spending, building expansion...it's what all the economists are calling for.
So I guess for YOU and YOUR money that may be true, but to paint all potential investors with the same broad brush is shortsighted.
In the long run it may not happen, but to say not even "consider" it is shortsighted. Everything should at least be considered, and then proceed or not on its' merits.
Not playing games, just questioning silly statements.
Feb 16, 2009 at 9:33 a.m.
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If Chicago gets the Olympics,all the rooms in a 200+ mile radius will be booked.
Feb 16, 2009 at 8:51 a.m.
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Maybe Janesville will get some of the stimulus money from the Obama administration to build these hotels and remodel the ice arena.
Feb 16, 2009 at 8:49 a.m.
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It's funny how they call some of these places hotels. The Lannon Stone? Isn't that a place where you pay for a room by the week month and hour?
Feb 16, 2009 at 8:12 a.m.
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But, but, but where are all those hockey players going to stay?
Feb 15, 2009 at 11:40 p.m.
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JohnDoe, I'm not sure why you're calling me out, or what you suppose about my politics. Say what you mean, be clear, and don't play passive-aggressive games.
Feb 15, 2009 at 7:04 p.m.
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I like how someone can say "This just isn't the time to consider expansion"
But yet, that same person will espouse the free enterprise system in our capitalistic society.
I wonder how much capital he has invested.
I wonder where the Obama regime stands on such expansion.
Feb 15, 2009 at 11:39 a.m.
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Honestly, how many people would actually stay at the Delavan Inn (40 rooms)or the Lannon Stone (27 rooms)?
Feb 15, 2009 at 11:23 a.m.
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I know a lot of people won't agree but why don't they put a great wolf lodge or sometype of hotel like that here you would be surprise I believe a lot of people would stay here than go to the dells. That way there's a fun waterpark here with a hotel to stay at none of the hotels here have that luxury. That is just a suggestion. I know I would go to it instead of the dells.
Feb 15, 2009 at 10:22 a.m.
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Out of those 777, how many of you would actually stay in those establishments? There are really only a couple of nice hotels in this town, Hampton, Holiday Inn and Best Western.
Feb 15, 2009 at 8:58 a.m.
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A much cheaper alternative to the crazy prices of those water parks in the Dell's is to rent a room locally and use the pool. It is like getting away without getting away. You spend locally and help out. The kids don't know the difference. Order in a couple of pizza's, load up the snacks and soda's, and let them swim away for about 25% cheaper than the Dell's.
Feb 15, 2009 at 8:50 a.m.
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At the risk of digressing a bit from the topic here, it appears that redevelopment of the former Menard's site is not in the foreseeable future. What a lovely way for people passing Janesville on I-90 to see our community! When WalMart proposed their new development several years ago, measures were taken by the city to ensure timely redevelopment of their vacated site due to its size and prominence. Why wasn't the city more forward-thinking about the future use of the large and conspicuous vacated Menard's property? It has numerous obstacles to redevelopment, not the least of which is access. It's going to take a creative effort and deep pockets to get something going there. What's being done to help that happen? Or is it just okay to leave that big parcel empty for an extended period of time? Clearly the downturn in the economy, and especially the local economy, is the problem, but better planning could have helped.
Feb 15, 2009 at 6:43 a.m.
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Ski nationals is only 2 days what about the other 363 days. Day to day 40% of Janesville's rooms are empty, why build more.
Feb 15, 2009 at 6:23 a.m.
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777 rooms are not enough in Janesville when certain events are happening. True, this is generally in the summertime. Last summer without the flooding, those 777 rooms would have been easily filled by the 14 water ski teams coming to Janesville for the National Tournament. There are many times that this tournament is hosted in Janesville and there are other things going on in the area, (Madison, or Rockford) where Janesville rooms are also used. If Janesville is going to continue to host any kind of National tournament, be it; softball, curling, soccer, or skiing, we need about 300-400 more rooms.
Feb 15, 2009 at 2:31 a.m.
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This just isn't the time to consider expansion, as both business and leisure travel are highly recession-sensitive. Janesville also has uncertainty about long-term growth. We should have a better idea about that in around 18-24 months (I don't expect it sooner because of the likely depth and extent of this recession).
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If I-39/90 is ever upgraded to six lanes (probably 10 years off) that would probably be a cue for increasing capacity here.
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