Next taxpayer-subsidized hotel: Salt Lake City?


The hotel industry has been attracting many cities in Utah lately. West Valley City has already decided to loan $30 million to a private developer to build a hotel; Holladay wants Salt Lake County to loan it $450,000 to prepare a site for a hotel; and now Salt Lake County is considering subsidizing a mammoth convention center hotel in downtown Salt Lake City.

Is getting into the hotel business a proper role of government? We interviewed Derrick Smith, a concerned citizen; Scott Beck, CEO of Visit Salt Lake; and Richard Snelgrove, Salt Lake County Council member, to find out what they think. Watch this video report:


Here’s the script of the video:

DERRICK SMITH: “Now is not the time for us to be taking large chunks of dollars, investing them into a hotel system that will compete with private entities that are already doing a fabulous job in downtown Salt Lake City.”

VOICE-OVER: Derrick Smith, a concerned citizen, protested on Tuesday, August 16th, to the council members of Salt Lake County. Smith, along with many other taxpayers, does not want to subsidize a hotel that would be built next to the Salt Palace Convention Center in Salt Lake City.

SMITH: “My primary concerns with this program are the fact that we are using government dollars to compete against private enterprise.”

VOICE-OVER: The purpose for this hotel is to attract more conventions to Salt Lake City, thereby increasing economic activity for the state. Scott Beck, president and CEO of Visit Salt Lake, explains why he believes building this hotel is a good idea.

SCOTT BECK: “As we go through what we call a competitive analysis, which is something that we do regularly, and go through our lost-business reports, it’s clear that as a destination the introduction of a convention center, or what’s called a headquarters hotel, is vital to our progression as a convention destination.”

VOICE-OVER: Not only does Beck believe building the hotel is a good idea, he explains it’s a critical part of making Salt Lake more attractive. Without it, top-tier conventions are skipping Salt Lake City and going to other cities such as Denver.

BECK: “When you talk about a citywide convention, you’re talking about a peak room night block of anywhere from 2-3,000 people, Outdoor Retailer, it’s 6,000 people. In a competitive situation when you’re competing against Salt Lake and Denver for 3,000 peak room nights in Denver the meeting planner who has to sign contracts, have attrition clauses, cancellation clauses. They might have 12 to 13 hotels in their block in Denver and in Salt Lake they would have 20 to 22.”

VOICE-OVER: At the County Council Meeting on Tuesday, August 16th, the council voted 5 in favor, 3 against, and 1 abstained. This favorable vote means the next step towards building the hotel can be taken, which is to gather more information and go forward with a request for proposal. One of the council members who opposed the idea was Richard Snelgrove.

RICHARD SNELGROVE: “I’m troubled by it on several reasons, and that is, if it’s just a good idea private money would find a way to fund it. Good ideas, capital will flow to good ideas, and so if this one is requiring public money to help fund it, then it’s a flawed concept because it cannot stand on its own.”

VOICE-OVER: The hotel itself would be privately funded and built; the public subsidy would be used to fund the hotel’s public meeting space and parking garage. But Councilman Snelgrove is still not buying the idea.

SNELGROVE: “When government gets off from their basic mission, which should be police, fire, parks, libraries; when they get away from their basics and get into competing or trying to compete in private enterprise, invariably, government comes up the loser and consequently the taxpayers. This is a 5-star hotel, room rates are going to average $335 a night, this type of Taj Mahal hotel is not a good fit for this market.”

VOICE-OVER: However, Scott Beck explains this hotel would be a good fit for the market because he says there is a demand for the hotel.

BECK: “Really what it gets down to is density, and that we don’t have a large enough hotel within close proximity.”

VOICE-OVER: But as Councilman Snelgrove says,

SNELGROVE: “Salt Lake City does have the capacity to host large-scale conventions; after all, we’ve hosted the largest convention of them all, and that is the Olympics.”

VOICE-OVER: So what do you think? Should government get involved in the hotel business? After all, there is a subsidized hotel being built in West Valley, possibly Salt Lake, and now there’s even talk of another in Holladay. Where do we draw the line? Because remember, all public policy changes lives. For Sutherland Institute, I’m Alexis Young.