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Officials defend hotel study

Staff writer

A $7,000 feasibility study paid for by the City of Marion has concluded the area can support an additional 31-unit hotel, but the consultant who created the report has been criticized elsewhere for performing what some call misleading research.

Despite criticism and apparent flaws in the report — such as its listing as current a local restaurant that closed after a fire more than two years ago — city officials say they are confident in the research and think it was worth the expense.

The study was completed this spring by Core Distinction Group LLC, which appears to work with hotel franchiser Cobblestone Inn and Suites and construction company BriMark Builders.

Core Distinction routinely recommends Cobblestone, which often calls upon its sister company, BriMark Builders, for construction.

Economic development director Terry Jones said he was aware of concerns when he selected Core Distinction for the project.

“We did background research, and found other companies that cost the same if not more,” he said Tuesday. “BriMark Builders were OK. They didn’t force us to use anybody in particular; they just made a suggestion. It’s just business partnerships.”

Core Distinction appears to have only one employee, who uses a generic gmail.com email address without a company website or email domain.

A hotel owner in Chanute complained in January that a very similar study that Core Distinction conducted there had based area occupancy rates off hotels from larger areas nearby to make the market seem more viable for additional lodging.

The Marion report listed the area’s “market performance” for 2014 at 64.5 percent annual average occupancy rate. These figures were based on three hotels from Newton and three from McPherson and didn’t include any Marion lodging. Occupancy rates for Marion lodging weren’t given in the report.

Along with Country Inn Motel on Main St. and Country Haven Inn in Hillsboro, the report included just two bed-and-breakfasts, Historic Elgin Hotel and Country Dreams, as local lodging options.

Jones said the study would be helpful to the city regardless whether a hotel was brought in.

The report included a list of market “benefits” and “challenges,” along with entities that are “missing” from the market.

The benefits listed were Marion’s family-friendly community, its recreation facilities, hospital, schools, loyalty to local businesses, and proximity to US-56.

The challenges listed were its low population, lack of restaurants, limited labor pool, high property taxes, and minimum wages. The study did not explain why minimum wages was listed as a market disadvantage for a hotel firm that would hire locally and serve out-of-area clientele.

Missing from the Marion market, according to the report, are a high-quality family restaurant, car dealership, larger manufacturing business, what the report termed a quality hotel, and a community center. The report did not mention Marion Community Center or Performing Arts Center.

“It gives an overall assessment of economic conditions within our community,” city administrator Roger Holter said. “Probably 75 to 80 percent of the information that came in on that feasibility study is directly transferrable to other economic development opportunities that present themselves, from manufacturing to retail endeavors.”

The city is targeting development along US-56 because of its traffic numbers, which Kansas Department of Transportation lists as 2,570 cars per day. Out-of-town traffic can bring money into the community, Jones said.

Other communities in the county have greater highway traffic. KDOT documents list Hillsboro’s daily total at 3,360, Peabody’s at 4,270, and Florence’s at 3,250.

To get a hotel built, $1.1 million, about 40 percent of the total cost, would come from local investors. The rest, $1.6 million, would come from a bank loan. A direct financial contribution from Cobblestone was not indicated in the study.

According to public documents, Core Distinction, whose business offices appear to be in a 2½-bedroom apartment in suburban Phoenix, has offered to conduct studies for such communities as South Hutchinson; Wyandotte, Michigan; Schuyler, Nebraska; Wahpeton, North Dakota; Sterling, Colorado; and Maricopa, Arizona, for $7,000 to $8,000.

Studies from other cities are very similar to the one Marion received in format and in conclusion.

The newspaper could not find any feasibility study conducted by Core Distinction that recommended against building a hotel.

Jones said the 31-bedroom unit that Core Distinction proposed for Marion was the smallest Cobblestone constructs.

He said both the city and the chain would have steps to take if a deal was to move forward.

“We’re just working through the details and specifics, discussions about what, if anything, they’ll have to pay for the land, tax abatements, what ones they want to pursue,” he said. “The developer’s got a big balance sheet, and at the bottom, he’s trying to get his investors’ return-on-investment as high as possible.”

Jones said the city didn’t want to go overboard with giving the firm benefits.

“Anytime you’re working with incentives, it’s a fine line,” he said. “You can’t give them the farm. If you take all the benefits away, what’s the point?

“It really comes down to what the developer asks for.”

Jones said Marion could get a hotel if it wanted one.

“If the city wants it, we’ll go forward,” he said. “If I get people saying, ‘we don’t want this,’ I’ll drop it. If the intent of community is to get this hotel, we can get it.”

Last modified June 17, 2015

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