Breckenridge Town Council not giving up on idea of high-end lodging development
Consultants charged with vetting a four-star hotel and conference center on Breckenridge’s F-Lot said Tuesday the project is not financially feasible, citing a $28 million gap between the projected value of the hotel over 10 years and the cost of construction.
But members of the Breckenridge Town Council were undeterred by the report and will continue to research ways to make the project work, as well as possible economic impacts of adding another lodging company to the market.
Town leaders said that without luxury hotel choices Breckenridge would lose out on potential visitors and might fall behind competing mountain resort communities such as Aspen and Vail.
“This community desperately needs a four-star product,” Councilman Mike Dudick said at Tuesday’s work session.
At least one council member was not so sure, however. Councilman Ben Brewer was hesitant to continue exploring the project given the results of the study, calling the $28 million gap a “canyon.”
The study — produced by HVS Consulting and Valuation Services, Oz Architecture and Lowe Enterprises — focused on a project designed to meet a number of criteria set by the council. It imagined a high-end resort with 214 rooms and 22,000 feet of conference space that would connect to the Riverwalk Center in the back. The building would also replace all of the parking spaces that would be lost by developing the Tiger Dredge and F lots with underground parking facilities.
That project, the consultants said, would not be financially viable for a hotel developer, although a smaller resort might be. But a different design might mean relinquishing some of the council’s criteria for the development or taking a bigger economic toll on other lodging companies in Breckenridge.
“Could you build a three-star Residence Inn, and would it work? Yes,” consultant Brett Russell, of HVS, told the council Tuesday night. “But it will be more of an impact on the local market.”
The consultants said the larger high-end hotel ended up not being financially feasible because it is expensive to build in the mountains, the seasonal market lowers profit margins and the replacement parking structures added so greatly to the cost.
Based on projections, the envisioned hotel and conference center would not make enough money over the next decade to make the capital investment worthwhile for a private developer.
“You want it to have a value that’s higher than the cost to build, so there’s profit to be had,” Russell said. But in his calculations, a 214-room resort on the F and Tiger Dredge lots would fall $28 million short.
It would also take a toll on existing local businesses.
The consultants projected other Breckenridge lodging companies would take a hit of $1.43 in revenue per available room night if the hotel were built. The proposal has drawn criticism from some lodging company owners.
“I believe that most lodging companies in town are having doubts about the ability of additional four star rooms to be absorbed into our current level of demand without a significant negative impact on our lodging companies,” Toby Babich, a member of the Breckenridge Lodging Association stated in an email. “There is a real and genuine concern that enough demand does not exist to support hundreds or thousands of new rooms in our town, and small business will suffer as a result of diluted rates, and revenue being spread thin.”
But it might also help the town recapture a portion of the tens of thousands of visits per year it is missing out on.
“Currently, we are leaving on the table 27,000 guest room nights for not having that level of service,” Russell told the council Tuesday.
Breckenridge’s F and Tiger Dredge lots, two town-owned parking properties along Park Avenue, became the object of development desire in 2011 when an East Coast company pitched an unsolicited proposal for a high-end hotel on the site as a public-private partnership with the town donating the land. Town leaders were open to the idea at the time and put out a request for other development proposals. Several takers presented ideas for a resort on the property, and some cited the need for luxury lodging options in Breckenridge.
Council members ultimately scrapped the idea in 2011, but commissioned HVS to determine whether the site could support a four-star hotel that met the town’s expectations and what the economic impacts of such a development might be.
The study presented Tuesday cost $38,500.
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