Wichita receives $150K profit-sharing check from Hyatt
05/01/2013 10:51 AM
05/01/2013 10:51 AM
The city of Wichita has received a $150,000 profit-sharing check from the Hyatt Regency Wichita — the first since the city bought the hotel in 2001.
The money will go toward balancing the 2013 and 2014 budgets, city officials said Wednesday. The check drives the city’s annual return on the hotel to about $350,000, including rental payments for promenade meeting rooms totaling about $200,000 annually.
It’s the first of what city officials expect to be annual profit-sharing checks from the hotel, which was bought in 2001 by the Bob Knight-led City Council to ensure an inventory of convention hotel rooms downtown.
“It’s proof that (former city manager Chris) Cherches, Bob Knight and those guys had an excellent idea that has proven over time to be successful,” said Mayor Carl Brewer.
Brewer said the Hyatt is a solid public investment that supports conventions, tourism and ongoing core-area improvements downtown.
“The hotel has always been profitable,” Brewer said. “And it’s a key part of recruiting conventions and events to Wichita, along with a key piece of our downtown revitalization.”
After 2014, City Manager Robert Layton expects to add the profit-sharing revenues to the debt service and capital improvement funds. City officials now are working through projected budget deficits of $1.3 million this year and $3.6 million in 2014.
The city sets aside 5 percent of net operating revenue at the hotel for capital improvements there, which Brewer said have produced between $700,000 and $2 million annually for hotel maintenance and improvements.
Next year, the first remodeling of the guest rooms at the Hyatt since its 1998 construction will begin, Layton said.
Municipally owned hotels aren’t unusual in the United States, said Kathryn Potter, executive vice president of marketing and communications for the American Hotel & Lodging Association. Other cities in the hotel business include Baltimore; Boston; Trenton, N.J.; Cedar Rapids, Iowa; and Jackson, Miss., the AHLA said.
Wichita was on the leading edge of taking over flagging properties to maintain a strong convention inventory of rooms in 2001, Layton said.
“The city of Phoenix, for example, owns two hotels near the city’s convention center,” he said. “Wichita was an early adopter of that model in terms of our convention center, but it does happen.”