KANSAS CITY, Mo. — When downtown Kansas City's Loews Convention Center hotel opens in 2020, the number of hotel rooms will swell from 13,946 to 16,931.
With a current occupancy rate of 66 percent - a healthy rate is around 72 percent - some are raising concerns about a glut of hotel rooms once the new rooms come online.
Studies completed by Jones Land LaSalle IP, Inc. and VisitKC show the new hotel could drop occupancy rates.
As evidence of the glut of supply, Drury Hotels pulled a plan for a hotel at the old Kansas City, Missouri School District Board of Education building at 12th Street between McGee and Oak.
Drury Hotels sent a letter to the Kansas City Economic Development Corporation stating they believe their project became, "financially risky, particularly given the projected doubling of downtown hotel room inventory over the next twenty-four months."
They also anticipated a substantial decline in revenue per available room while the market absorbs this growth.
"Hotel chains are looking at Kansas City and they're saying this is too risky of a market because there's a glut," Patrick Touhey of the Show Me Institute said.
The Show Me Institute suggests one way to reduce the influx of hotels popping up is to do away with the incentives altogether.
“Developers know that if they ask for subsidies they get them," said Touhey.
However, Kurt Mayo, executive director of the Hotel Lodging Association of Greater Kansas City, points out the incentives were needed.
"Those subsidies were necessary to get the product and the product is here now," Mayo said.
Mayo said the oversupply represents a grow pain for a growing city, which will he believes will put Kansas City in a better spot.
"Conventions are growing and they are getting bigger," Mayo said. "They require more rooms and so this gets us the opportunity to book conventions that we haven’t had before."
While Mayo agrees the incentives for downtown hotels should be reduced, he believes Kansas City has the best package it has had in decades.
