Civil Discourse Now

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City could tank $1 billion in "running" a hotel

Remember: June 5 at 7 p.m., the City-County Council will vote on a $625 million bond issue to finish & run a hotel after the group that started it couldn’t find a bank to take the risk. I’m not a fan of big banks. A bank that can loan high nine figures is “big.” Also, they want profits. 1/7

Loans provide profits in the interest borrowers pay. Borrowers usually pay interest when their business succeeds. If a bank declines an opportunity to invest, one may infer the risk of financial loss was great enough to have the bank “pass.” Indy faces the task of stepping in and - ? 2/7

To run a hotel is hard: interactions w/X number of guests, management of front desk staff, housekeeping, the restaurant/bar (usually) & security. At the same time, the hotel has to bring in business, i.e., sales. This all requires highly-trained professionals w/years of experience. 3/7

Banks research all of this before a loan is made because running a hotel at a profit is that much harder. A lot of $$ is at stake. One estimate: fr “construction (if you decide to build), furniture, equipment, licenses, etc,” it costs $8,400,000 – $10,800,000 to build & open a small hotel 4/7

and $73K to $91K in operating costs/month to run the hotel.” The average cost to open a 115-room hotel is around $22,000,000. Hoteltechreport. To secure financing you need a “well-researched business plan to prove” there’s “a good return on investment.” Id. And? 5/7

Frequently, as in any venture, there are cost over-runs. Sources for the $ can be private investors, investment groups, friends and family, “or banks.” Id., Either Indy is creating a crew to run a hotel (“Hey! Let’s put together an NFL team from scratch & win the Super Bowl!”) 6/7

or will overlook someone else running the place. The strongest argument for Indy to proceed w/this disaster-in-the-making is that X-number of dollars have been spent to date and no one wants to see that $$ go to waste. But to toss away nearly $1 Billion is far worse. 7/7

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