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High-season hotel space and a lost childhood reclaimed

OpEd

By

By Brian King

 

As someone whose livelihood relies on selling wine to local hotels, restaurants and shops, I’ve said for years that it is incredibly appropriate that the Bear Flag Revolution happened right here in our square.

The reason is that, today, the annual cycle of our local economy is like that of a bear – we must fatten up as much as we can during the busy summer months to survive the lean hibernating winter months that lay ahead.

I’ve read a statistic about hotel occupancy in Sonoma being somewhere in the 60-percent range. Indeed, if you take the total occupancy and divide it by 365 days, you’ll get a figure somewhere in the 60s. But that would also be like saying that AT&T Park in San Francisco only averaged 10,000 fans, because you took the total attendance and divided it by a year. The real question is, what is the occupancy during those bud-break to harvest months (May through October) when our economy needs as much influx as possible? If someone bothers to ask that question, you’d find the answer to be more in the 95-to-100 percent range, and that is why this hotel is being brought up.

In my wife’s line of business, she’s had to direct people she’s working with during these months to stay as far away as Occidental, because of the lack of hotel space in their price range.

And she has recommended that people with plans to host an event here should book their rooms at least 15 to 18 months in advance. That’s not opinion, that’s fact.

With that in mind, what if you, as a lifetime Sonoman, wished to host a family reunion but found that, for the size of your party, you are forced to have relatives stay in Sebastopol or Occidental because of a lack of rooms in town?

The bottom line is this: A 60-room hotel isn’t a natural progression to blowing up City Hall and replacing it with an IKEA. A hotel of this size isn’t going to look like some Honolulu combo-skyscraper monstrosity. Times change, needs change.

The costs and challenges of being a small local business owner are different than they were 10, 20 or 30 years ago, as you are no longer just competing with your neighbor, you are competing with everything online in a global economy. Holding back our ability to sustain ourselves for the sake of maintaining some “Leave it to Beaver” dream isn’t appropriate or progressive.

I leave you with this last anecdote. Although I’ve only lived here for a decade, both sides of my family have lived in the Bay Area since the 1880s. My mother grew up in a large family in a large ranch house in Walnut Creek, with peach orchards and all of that, and I have fond memories of family holidays there during my own childhood – Easter egg hunts, family weddings and such.

My grandparents sold that property a couple of decades ago and I passed by it shortly afterward, only to see everything gone and a cul-de-sac neighborhood in its place. I felt a part of my childhood was obliterated that day, and held bitterness toward that moment for many years.

Recently, I passed by there again, and do you know what I saw? A neighborhood party. Barriers blocking cars, bouncing house in the street, kids running around, neighbors laughing with food and drink in hand.

I broke down then and there as I became overwhelmed by the selfishness I was harboring all this time.

Here I was, feeling sorry for myself, but what I should have been doing was celebrating the myriad of childhood memories that were, and continue to be, created in its wake. I bless all of those families whose homes are where my memories once stood, and I hope that, in that light, regardless of what happens next week, the citizens of Sonoma can embrace any new hotel, restaurant, shop or event that chooses to be a part of our present and future.

And in that last thought, I hope I’ve made progress.

• • •

  Brian King is a resident of Glen Ellen.

 

  • bob edwards

    Glen Ellen could use two or three nice big 50 or 100 room hotels, Right “downtown.” And please don’t worry — the Glen Ellen you know and love will always be in your memory. Take pictures of it now.

  • Mike Stephens

    Right on Mr. King! Great letter and very true. Thank you for sharing your personal story and for making it clear that a 60 room hotel in business district is certainly not opening the flood gates for destruction, but rather progress and improvement.

  • Mike Stephens

    Mr. Edwards… Glen Ellen does have very nice hotels and probably more hotel rooms per the population of Glen Ellen. What are you so afraid of? You are ok with 5 large corporate grocery stores in Sonoma, but have an issue with a 59 room inn? Hum… I just can’t figure it out.

  • Michael Lockert

    Measure B does not limit the number of hotel rooms that can be built in Sonoma, so no problem,
    Mr. King

    • Chris Scott

      Not.

  • Jim Pacheco

    Brian,
    Here are the occupancy rates for Sonoma for 2012 from the KMA Impact Report:
    Apr 63%
    May 67%
    Jun 71%
    Jul 77%
    Aug 77%
    Sep 81%
    Oct 79%
    So the answer is not 95-100%. Please gets your “facts” straight.
    Also, the proposed hotel has said their rates will be around $450 per night. Not exactly the affordable. Perhaps you would like to see a 100 room Motel 6 built in town. They would certainly have lower rates.

  • Jim Pacheco

    By the way, if you build enough hotel rooms to lower rates, the total TOT revenue to the city actually drops. Just check out Yountville. It happened there.

    • Chris Scott

      You’re right it did happen. But years matter as it turns out; you left out that Yountville decline happened in 2008-2009 during the height of the recession. Sonoma, as you can see suffered a worse decline in TOT with no increase in rooms. Looking at a five year period the comparison in TOT between Yountville and Sonoma is even more dramatic. Yountville added 105 rooms over 5 years and their average annual TOT rose 10.96%, Sonoma’s on the other hand with only approx. 13 room increase average annual TOT increased by -0.1%.

      So of course the inescapable conclusion is that if Sonoma had added 105 rooms over the same 5 year period Sonoma’s average total TOT would have risen 10.96%. NOT!!

      Yountville: 2008-2009; 57 Rooms added: 345 > 402; TOT -6.87%

      Sonoma: 2008-2009; Approx. 13 Rooms added: Total 527; TOT -15.87%

      Yountville 2008-2012 Average Annual TOT Increase +10.96% (Total Rooms Added: 105)

      Sonoma 2008-2012 Average Annual TOT Increase -0.1% (Total Rooms Added Approx: 13)

      (Note; I may be off by 1 or 2 rooms added in Sonoma.)

      Want to try again with numbers ?

      • David Eichar

        Yountville, fiscal year 2007/2008 versus 2008/2009, when the number
        of hotel rooms jumped from 345 to 402, a 57 room increase, the annual
        occupancy rate dropped from 75.6% to 72.6%. And even though the number
        of room-nights sold in the year increased from 95,341 to 106,724, the
        total TOT revenue dropped from $3,381,677 to $3,149,857, a 6.9% drop.
        If the decrease was due to the recession, then the number of room nights
        rented would have decreased, but they increased.

        And Sonoma’s TOT revenue decreased because there was a decline in room nights rented, from 119,862 in 2008 to 103,069. Also, Yountville’s annual occupancy rate over the past 10 years has been between 67.6% to 75.9%; while Sonoma’s has been 57.1% to 66.1%. The room rates in Yountville have been greater than Sonoma, partly because the annual occupancy rate is greater.

        I other words, Yountville’s has had an under-supply of hotel rooms, while Sonoma has an over-supply of hotel rooms. This has to be taken into account when calculating projected Average Daily Room Rate (ADR) and thus TOT tax revenue.

        See the Impact Study on the Preserving Sonoma dot com web site for a more thorough analysis of TOT revenue versus occupancy rate.

        • Chris Scott

          Mr Eichar;
          Simply put, your logic i flawed and your math is wrong. I will explain, but first I’m going to the grocery store.

          For your amusement, why don’t you contemplate what an average means in terms of a fixed range of numbers.

        • Chris Scott

          Mr Eichar;
          I came back monetarily as I thought of another data point for you to consider. Yountville:
          2011/12 422/450 Rooms (+28); TOT rose by 24.6%
          2010/11 422/422 Rooms (+0); TOT rose by 19.8%

          One or two year’s data is of relatively small value. Multi year data is a requirement for a meaningful analysis of the past and for future planning purposes.

          • David Eichar

            Chris,
            If you have read the Preserving Sonoma Impact Study, you will see that the numbers you sited support, and were helpful in drawing the conclusions in that document:
            1) Even with 0 hotels rooms built, the TOT revenue to the city will continue to increase (of course barring another recession). This has happened in Sonoma, except for the recession years, as you have pointed out.

            2) The best way to maximize TOT revenue to the city, is in small incremental increase in the number of rooms over the years, rather than a big jump, which risks over-supply.

            And again, if you read the Study, you will find url references to how ADR and occupancy rate are related. Multiple years were taken into account.

            I think you are beginning to understand it now. Sometimes it is counter-intuitive, which is why Protect Sonoma erroneously claims the Measure B’s passage would risk future TOT revenue to the city.

            But, Measure B is really not about trying to get as much tax revenue to the city of Sonoma. It is about the what the future of Sonoma looks like. Sometimes it takes the initiative process to let the elected officials know what the citizens of Sonoma want for the future.

          • Chris Scott

            DE: “Yountville’s annual occupancy rate over the past 10 years has been between 67.6% to 75.9%; while Sonoma’s has been 57.1% to 66.1%. I other words, Yountville’s has had an under-supply of hotel rooms, while Sonoma has an over-supply of hotel rooms.

            CS: No! A hotel is a service business not a product.

            Demand for services is dependent primarily on externalities; the location, the market profile. Yountville is the Napa Valley, proximity to and large number of vineyards & wineries, restaurants, area events, % destination traveler; proximity to other major tourist markets, i.e.; SF, Sonoma.

            Napa Valley wine region is better known, bigger, more to do throughout the year. Events centered on seasonal events, fall harvest, holiday season, etc. Yountville is also home to the French Laundry restaurant a destination visitor draw in its own right.

            Hotels are fundamentally a seasonal service business, with exceptions. Las Vegas and SF are destination entertainment, convention and family resorts with high volume hotel demand year round (80%+/- AOR).

            Sonoma is a traditional high/low season location. Low Season Nov-Apr 6mo average occupancy rate ~50-55%; High Season May-Oct 6mo average occupancy rate ~70-75%. The average of 50-55% and 70-75% = 60-65% average annual occupancy rate. Note; during Low Season Sonoma’s hotel room rates are lower by 20-50% in order to attract guests, reflecting low demand.

            Sonoma’s many years of historical data repeating year after year of ~60-65% average annual occupancy rate reflects a well defined and consistent pattern. Simplified; Summer high season & high hotel demand; and Winter low season & low room demand. We all love Sonoma, but there is really very little to do in Sonoma Valley during the winter compared to the summer.

            Most important for the Measure B debate is that Sonoma’s occupancy rate has stayed within the same narrow range through years when the total number of hotel rooms in Sonoma doubled; 2000-2010 from 250 to 500. This demonstrates; 1. There is latent and unaccommodated Demand for hotel rooms in Sonoma; 2. That demand is substantial and fills newly added hotel rooms within the same year capacity is added; 3. The increased occupancy follows exactly Sonoma’s historical seasonal occupancy patterns and percentages.

            Most importantly: Occupancy is not demand, it is consumption. Demand is much more complex with such things as market segments, buyer requirements (bed size, etc.) One of be biggest problem with Measure B, it treats all hotels and hotel rooms as the same.

            Yountville’s monthly occupancy rates are nearly consistent for the ten months of 2012, Feb-Nov 65%-84%; Dec 51% and Jan 54%; an annual occupancy rate of 71.6%.

            A decrease in hotel rooms available does not necessarily lead to increased ADR. Competition (Sonoma and SR & Napa. Type of room and prices. Supply and demand in a service business differs from a product market – even there a drop in supply does not directly translate into higher prices.

            DE: The room rates in Yountville have been greater than Sonoma, partly because the annual occupancy rate is greater.

            CS: That is one factor but not the only reason. Other reasons include amenities, location, regional attractions and events, not to mention cach’e. Last, maybe most important in the case of Yountville is the French Laundry restaurant.

            DE: If you have read the Preserving Sonoma Impact Study, you will see that the numbers you sited support, and were helpful in drawing the conclusions in that document:

            CS: PS Impact Study is an embarrassment. It would fail a freshmen (whatever subject) class. Last page with 38 items, 0.5 font, packed like sardines, barely enough room for heading & page number. For 15 pages, 12 pages of actual text. You’re an IT engineer, if you read it you know its problems; the data is manufactured, conclusions from the sky.

            DE: Even with 0 hotels rooms built, the TOT revenue to the city will continue to increase (of course barring another recession). This has happened in Sonoma, except for the recession years, as you have pointed out.

            CS: Maybe, hopefully. But the increase will be insufficient to meet the needs of the city at the level of a few years ago let alone going forward.

            DE: The best way to maximize TOT revenue to the city, is in small incremental increase in the number of rooms over the years, rather than a big jump, which risks over-supply.

            CS: No. For all the information above. But most glaring is the doubling of hotel rooms in the last ten years, as Mr Barnett, you and Pre. Sonoma keep pointing out.

            Sonoma’s future? Well we have different visions. My view, I do not want Sonoma to sacrifice it’s future trying to preserve the present. MR Barnett has already admitted in these pages; There has not been a problem in more than the last ten years. There is not a problem now. Traffic, pedestrians, etc have continued to grow. Measure B is a solution looking for a problem. (His exact words were, a solution anticipating future problems.)

            Mr Barnett is also tacitly and vbery publifcally acknowledging the current General Plan and processes have work quite well.

            Vote NO on Measure B.

          • David Eichar

            CS: … “But the increase (in TOT revenue) will be insufficient to meet the needs of the city at the level of a few years ago let alone going forward.”

            DE: The opponents of Measure B are saying this, but I have yet to see any analysis of how much increase in expenses are needed by the city that would need to be covered by TOT revenue. And I have not seen any analysis by the opponents of Measure B alone how much TOT revenue would differ if Measure B passes versus fails. So, how can the opponents of Measure B claim that emergency services are at risk, if no analysis has been done.

            I do agree with you that predictions of occupancy rates and room rates is complex, as you pointed out. I think we both agree that room rates in the winter are less than in the summer and fall, due to the demand/occupancy rates experienced. The national hotel chains, like the airlines, have a complex rate calculations, based upon demand relative to supply.

          • Chris Scott

            Whether this is denial for the purposes of Measure B advocacy or real obviously only you know. If real it is surprising given the appearance of your civic involvement vis-à-vis Measure B.

            My first reaction is you have not been following the city’s financial situation resulting from the recession which mirrors the us economy and every city and towns; loss of revenue, increasing expenses, cut backs in services to the bone, delaying needed infrastructure maintenance and struggling to recover clawing out of it.

            Additionally dramatic for CA and Sonoma is the loss of CRA funds, estimated to be $1.7m annually.

            Road repairs is one area everyone seems to cite as a badly needing to be addressed in Sonoma. It will take a lot of money to redress the last few years of neglect; much more than it would have had repairs been ongoing. Road repair cost are invisible to the budget because they are discretionary.

            Non-discretionary; The city also has an unfunded pension liability. Emergency Services are a very visible very large part of the city budget. The cost of services in Sonoma is rising faster than is the norm as the city’s population is skewed to the elderly much more than the county or CA; 25% and rising versus ~14%.

            All this has been covered in the I-T over the last years as well as in the meetings and minutes of the City Council. Records for each are available online. The last months of this (sorry) very nutty B distraction has given me a lot of opportunity to do a lot excavation.

            “Complex rate calculations…” ? Another item raised in the Measure B Impact Study. The systems work for airlines given their business and constant instantaneous volume, in the millions per hour/minute worldwide, levels of transactions. Also for Las Vegas, Atlantic City’s thousands of hotel rooms. Sonoma? NO! The software, systems and IT costs are out-sized by any possible return, it’s too complex for a 25 or 59 room hotel, there isn’t enough volume and the business seasonality makes it a bit silly.

            Vote NO on Measure B.