MERRIAM, Kan. — City leaders in Merriam will soon consider a new plan to reinvest in the city’s aging hotel stock.
On Monday, the Merriam City Council reviewed a proposed grant that could help revamp local hotels to bring in more tax revenue for the city.
Currently there are four hotels in Merriam, all built between 1982 and 1998.
A 7% transient guest tax (TGT) applies to all hotels and Airbnbs within the city. Revenue from the TGT supports the Visitor’s Bureau, the farmers market and special community events like the Turkey Creek Festival.
“The average daily room rate in 2017 was $75.24, that has declined just in sheer numbers by 5% in 2021 to $71.55. If you account for inflation that room rate, if it were to consistently go up with inflation, it should be somewhere around $96.50. If you factor that in, it’s a 26% decline,” Assistant City Administrator Jennifer Jones-Lacy said.
Annual TGT revenue has declined by roughly 24% from its high in 2017 to 2021.
In 2021, police calls for service to Merriam hotels represented roughly 5% of all non-traffic calls. According to city documents, that’s a 57% increase from 2015.
Since 2015, 64% of all police calls from hotels have been from the Extended Stay at 6451 E. Frontage Road.
“It (Extended Stay) operates more like an apartment complex that has a lot of problem residents in it, as opposed to a hotel. It’s not bringing any different types of crime, it’s just bringing more concentration of it to that one location,” Merriam Police Chief Darren McLaughlin said.
City staff recommend creating a grant to incentivize hotel owners to upgrade their properties to attract more visitors to Merriam.
Under the Merriam Hotel Grant, the city would reimburse hotel owners between $5,000 and $250,000 for renovations made on their property. The grant would require a 50% match from the property owner with a minimum contribution of $10,000.
To qualify a hotel owner must be up to date on all taxes, have a valid business license and ensure the property is compliant with all city codes.
The money can be used to make upgrades to existing hotel rooms, refresh common areas like the lobby or swimming pool, or to make exterior renovations to the building.
The proposed grant program would make up to $1million available for one-time resources. The money would be transferred from the General Fund to the Transient Guest Fund.
“We are proposing that we do that by way of reducing the million dollars transferred to the Capital Improvement Fund (CIP), because we plan to use ARPA (American Rescue Plan Act) funds to pay for some of those capital improvements,”Jones-Lacy said.
Qualified property owners must provide proof of the flagship and details on the company’s brand property improvement plan, including information on any brand transition plans in the near future.
“We know that Lotus is hoping to transition to a Fairfield by Marriott. They may not be the only ones, so we would want that information,” Jones-Lacy said.
If the owner sells the property, or the business downgrades within two years of receiving the money, the owner must return the grant funds to the city.
Hotel owners receiving the grant would be required to provide benchmark data like the average daily room rate and occupancy rate for the year prior to and two years after receiving the funds. The city would not make payments to the property owner until the renovations are complete. Staff recommend requiring the work be complete within a year of the owner receiving the grant.
“A million dollars is a lot of money, but I see that there is a two-fold benefit. These businesses improve their facility, which will allow them to increase their rate. Which will ultimately tie-in to the taxes that the city receives,”Councilmember Jason Silvers said.
If approved, the program would begin in 2023. Applications would be submitted online and reviewed by Jones-Lacy, the Visitor’s Bureau Director and the City Administrator.
The council did not take any formal action Monday night. The city council is expected to review the hotel grant proposal in the coming weeks.
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