‘Simple arithmetic’ LTE Frederick News-Post

Sir: The advocates of putting tens of millions of taxpayer dollars into an upscale hotel downtown constantly cite the bonanza of spending and tax-generating dollars and new jobs that this establishment will supposedly create. Let’s apply some simple arithmetic to these claims.

• A 207-room hotel, 72 percent occupied on average. That’s a higher occupancy than the average hotel, but no matter.

• 200 x 0.72 x 365 = 52,560 room-nights a year.

• $26 million of new spending they say will be the impact.

More arithmetic:

• 26,000,000/52,560 = $495.

They would have you believe that the average hotel patron of this swish hotel will produce new spending of nearly $500 for every day they stay. Of the $26 million, $16 million a year (from the fourth year on) will be direct spending.

The arithmetic makes that just over $300 per hotel patron per night directly spent here, the other $10 million or $200 per patron per night being indirect or induced — trickle-down spending.

This is all highly speculative.

The downtown hotel boosters would have us believe that all this big spending is going to be new spending because the downtown establishment will be in a class of its own. Up there in the socio-economic clouds, it won’t even be competing with any of the “scrappy” hotels just off the interstates. It will attract an entirely new social set of big spenders here.

They have to present this fantasy of new money to be had from big spenders never before attracted to Frederick or else the much-vaunted spending and jobs at the taxpayer-subsidized hotel will be offset by losses of spending, business and jobs at all the inferior hotels and restaurants.

The boosters of the new hotel don’t use these highly speculative numbers and notions only to campaign for government support, they also underpin the financing they propose.

New spending generated by this hotel is supposed by all this arithmetic to produce the extra tax revenue that the city, county and state will rely on to service the debt they propose to incur on behalf of this hotel development.

I don’t cavil at catering to big spenders. It is legitimate business, and it could be good for Frederick. But it’s highly speculative, and speculative investments should be made by people who put their own money down — by investors alone. Government should stay out of it.

Interestingly, a straight and simple investor funding is exactly what got Frederick its first downtown hotel built in the early 1920s, the FSK Hotel (now condos) at Patrick and Court streets, according to The Frederick News-Post (March 26, 1999). The hotel enthusiasts made a local stock offering and 1,200 Fredericktonians subscribed, raising the money required from those who believed in the project and had the means to invest and could take the chance.

That’s the right way to do it.

Peter Samuel, Frederick


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