Is there a cap on how many hotels can be successful in Traverse City? Should the local hospitality industry pay into a fund to cover the costs of local infrastructure or even spur the development of more affordable housing in northern Michigan? The ticker sat down with Trevor Tkach, president and CEO of Traverse City Tourism (TCT), to get his thoughts on these big questions and more.
Ticker: Last fall we talked about eight new hotels in development in and around Traverse City. Two of those hotels have since opened — the Tru by Hilton in Garfield Township and the Alexandra Inn in East Bay Township — and four others are under construction. We also heard plans for two more Hilton hotels to be built at the corner of Three Mile and US-31, bringing 186 more hotel rooms to the region. Do you see a cap on how many hotels and rooms Traverse City can support based on recent demand?
Weaver: What I would share across the board – and it’s not just hotels, but Short Term Rentals (STRs) as well – is that demand continues to grow for Traverse City. Year after year, we continue to see more and more people wanting to experience the Traverse City area – not just in the summer, but year-round.
However, at certain times of the year it may be fair to say that supply outstrips demand. Of course, if you add another hotel, we’ll get closer to filling it up in the summer, and that means the total number of rooms we’ll sell between Memorial Day and Labor Day will increase.
But when you see a new hotel with 100 rooms come online, that’s 100 new rooms in our market every day, 365 days a year. You can’t take 100 of those rooms from January and move them to July to make more money. It’s a one-day cancellation rule, and once that day is over, you’ve either sold the room or you haven’t. And we know that as we’ve added more rooms both on the STR side and in the hotel space, there are certain times of the year when all the inventory just means you’re breaking up a limited amount of demand into even smaller chunks. This makes it more of a challenge as a business owner to stay viable
A 100-room hotel means 36,500 more room nights over the course of a year that you need to sell to achieve 100 percent occupancy. Even to reach 50 percent occupancy, you need to sell another 18,250 rooms. So the question becomes: What is a stable number [to have a successful business]? Well, we’ll find out about that. I am optimistic that we will have enough demand to keep these businesses viable. But the future is unwritten and tied to many different variables that influence travel decisions—things like consumer confidence, the economy, and gas prices.
Ticker: TCT has been working for a long time to introduce an indoor sports complex to the region. News broke earlier this year that TCAPS was considering a proposal to build new fieldhouses at Central and West. Has there been any movement since then?
Weaver: I believe the project is on track. I stayed closely engaged with Jessica Sullivan of the Traverse Indoor Sports Coalition, who leads the TCAPS project, and she was extremely positive about the progress. I also remained closely associated with [TCAPS Superintendent] Dr. John Van Wagoner, and it really seems like there’s a real interest on the part of the county to bring these types of facilities online for a variety of reasons. So I have high hopes that in the next few months we will start to see this project crystallize and we will see some real private fundraising needed to build these two field houses.
[Note: Under the current plan for the field houses, half the cost of the project would be raised through private fundraising, while the other half would be folded into the next TCAPS millage renewal.]
Ticker: What was your reaction to the news that the Traverse City Film Festival (TCFF) would be shifting its efforts to a weekly film series rather than a more traditional festival event?
Weaver: First and foremost, hats off to TCFF for coming up with a new strategy to keep the business going. Times are not easy for the movie industry, and for them to be creative and come up with a new concept that potentially helps keep the theater busy and full of customers, that’s a good thing.
Now, is the TCFF the same as what it was before, tourism-wise? Well, apparently not. You can’t just do year-round programming and expect it to be the same as having an internationally recognized week-long celebration in the middle of summer. It’s apples and oranges. [TCFF Tuesdays] is more like the National Writers Series, and while it’s nice to have these opportunities in our market that show our commitment to the arts and cultural scene, I’d still like to see something bigger. Maybe it’s not the middle of summer, but maybe there’s something more we could develop to top off this new film festival concept.
Ticker: TCT is funded by a 5 percent assessment on local hotel reservations. I have heard conversations from local residents who feel that the TCT hotel assessment should be changed so that it can also help pay for things like local infrastructure or affordable housing. What is your rebuttal to this line of thought?
Weaver: I don’t know if I have a “rebuttal”. I think it’s really important to discuss these things.
As I have shared before, TCT assessments can be used for a variety of purposes or reasons. We have quite a wide range of opportunities that we can get involved in. However, we at TCT must meet the demands of our members. Our members are the hoteliers who collect the ratings and help guide us on how to fully capitalize on the assets we have. We have all these hotels, with all these employees, and we want to keep these businesses busy and their people working. This is how our system works right now. And it also helps our local economy as a whole because we bring customers to the region.
Now, if members collectively decide they want to invest in something else, we have the ability to do that. So, for example, they could absolutely decide that they want to spend a portion of the assessment on a home. It is largely at their discretion. But what we’ve seen in this market is that business owners have been primarily concerned with solving the housing problem. When you see big properties like the Grand Traverse Resort and Spa building dormitories for their employees, I can assure you they are not the only ones doing this. There are many hoteliers and property managers who have invested in housing for their employees to ensure they have a reliable workforce. So, I think it would be misleading to say that the housing issue is not being addressed by our industry.
Also, the housing problem is not unique to Traverse City. This is an international issue. This is a challenge everywhere in the country and around the world. So it’s hard to say it’s an industry’s responsibility to sort it out. TCT and the hospitality industry are at the table. We want to help – and I think in our own way we do. But it’s a very complex and wicked problem, and we know it’s going to take a lot of thinking and a lot of action by a lot of different players to move the needle.