Rick Takach
Rick Takach

The owner of Lincoln's downtown Holiday Inn met with city officials Tuesday to ask them to stop subsidizing new hotels in a market with too many empty beds.

Rick Takach, president and chief executive officer of Vesta Hospitality in Vancouver, Wash., met with the mayor, Urban Development officials and three City Council members.

And although he admits it's likely too late to do anything about it, he told them the city should not have approved tax increment financing for three new downtown hotels. A fourth hotel near the planned arena is still pending TIF approval.

TIF uses the increase in property value of a redevelopment project to pay some of the development costs.

"I believe their plan ... needs to be revisited," he said in an interview.

Lincoln's hotel market isn't strong enough to absorb four more downtown hotels -- all of them slated to receive TIF, Takach said. Lincoln's occupancy rate is about 54 percent, he said, and 60 percent downtown.

There is no market in Lincoln for even one more hotel room, much less four new hotels with nearly 600 rooms, said Takach, who owns 12 hotels nationally.

"We have a lot of empty hotel rooms," he said. "The occupancies here are not that strong."

Takach said he has no problem with allowing the free market to decide whether Lincoln needs more hotels, but city subsidies change things.

Urban Development Director David Landis noted the other two downtown hotels -- Embassy Suites and the Cornhusker -- also got TIF.

"We've helped every (downtown) hotel, with the exception of one who didn't ask," he said. "Our norm has been to help hotels."

The point of TIF is to encourage redevelopment in the city core by reducing the cost of developing there, Landis said.

"In every case, we have attacked blight and we've created economic opportunity," he said.

Takach bought the 230-bed Holiday Inn two years ago for $15 million after managing it for three years. He said he's spent about $8 million on renovations.

Sign up for our daily news email

The top headlines from JournalStar.com. Delivered at 11 a.m. Monday-Friday.

"I saw a lot of potential in the property," he said. "I knew if the product was improved, there was more revenue potential."

He's happy with how it's performing, but worries what will happen if four subsidized hotels enter the market. He supports the arena project, but said the city's own studies indicate it won't create much more demand for hotel rooms. He'd rather see the city use public money to build things that would bring more people to Lincoln overnight, like convention space.

"I will lose my investment in this hotel if all these hotels get built," he said.

Landis acknowledges all four hotels may not get built.

"I think that's an open question," he said. "The real bellwether for the viability of a project is whether someone will lend them money."

Mark Hunzeker, an attorney representing B&J Partnership, which plans to lease Haymarket space to a local hotel developer, said the Legislature established TIF to redevelop older areas, so if Takach has a problem with that, he should take his case to lawmakers.

"I do know there was a pretty thorough market analysis done with respect to this particular project," Hunzeker said. "I think their analysis of the market is that they think they have a very good opportunity to be successful in Lincoln."

Reach Deena Winter at 402-473-2642 or dwinter@journalstar.com.

0
0
0
0
0

Load comments