Elkader Council approves $9,500 hotel study

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By Willis Patenaude, Times-Register

 

During last week’s Elkader City Council meeting, there was a lively debate surrounding a resolution to approve a proposal to conduct a hotel feasibility study. On the surface, this seemed like an uncontentious issue, but when it came to spending $9,500, one council member voiced his disapproval. 

 

“What I’m concerned about is we did this study 10 years ago and we made no progress? And I don’t think this is the year we want to waste $9,500,” said council member Tony Hauber. 

 

He also asked asking to table the issue to pursue other options to pay for it, such as going to the Economic Vitality Committee or asking the banks to pitch in like they did for the previous study. This time, those entities weren’t approached and, instead, the entire cost will be paid for using hotel/motel tax revenue. 

 

Hauber also noted  other resources for economic development that don’t require using Hospitality Marketers International from Milwaukee, Wis., the company in charge of the study. That includes the Clayton County Development Group, Upper Explorerland and Startup Dubuque, or tapping into local and regional investors. 

 

One reason a new feasibility study is on the agenda is because, over the past decade, the Elkader Inn has closed and several bed and breakfasts in town have shuttered, mostly due to retirements. Another obvious reason for the study is the revenue a hotel could generate for local businesses and the jobs it would likely create. 

 

Mayor Josh Pope supports the study. In a separate interview, he said, “Investment models that have been presented to us in the past require local investors, which means local people or an investor group. They usually want some city money as well.” 

 

Without a study, Pope doesn’t believe investors will come. 

 

City Administrator Jennifer Cowsert agreed “The study allows us to know for sure that we can support a hotel and provides information that the investors will need before making a commitment to invest,” she said in an interview. “We were advised that the best option is to have the study. And this makes sense because, if someone asked you personally to invest in something, you would want to know the projected rate of return.” 

 

However, Hauber disagreed both at the meeting and in an interview. At the meeting, he argued, “If I was an investment group, I would do a feasibility study to find out if it was feasible.” In the interview, he added, “I’m not against having a hotel feasibility study, but the ways in which this was approached bring me pause. This was driven off of an inbound from a single hotel brand, and the direction around having a feasibility study done at the city’s expense was pushed by them. It was also sold to us with a pie in the sky promise that, if we do this feasibility study, people will connect us with big hotel brands and investment groups. Earnest feasibility studies are not done like that.”

 

At the meeting, this line of debate prompted Pope to state simply, “are the investors going to pay for a feasibility study? That doesn’t happen [and] the company that we visited with said they wouldn’t even look at us without a feasibility study.”

 

Hauber asked how many hotel chains the city had spoken with, and the above mentioned Hospitality Marketers International was the only one this year. 

 

“So, we’re paying $9,500 for contact to investors? To me, it sounds like, when somebody comes to you and they say ‘pay me $9,500 and I’ll give you access to investors,’ that sounds like a grift,” Hauber said.  

 

The issue is not new, as the previous study was done to establish hotel feasibility in Elkader, and the city has pursued the idea ever since. Part of the issue is not being able to find local investors and local funding. Despite having talks with some hotels in the past, nothing has come to fruition, and the city is seeking nothing less than a chain motel.  

 

The reason for this, according to council member Daryl Koehn, is “Because when businesses are here, like Caterpillar when they were here, their people stayed in Manchester and Decorah and Prairie du Chien because we did not have that chain motel where they could their points or whatever when they went on their vacation. If that’s out on the table, then these people can pick it up and say, ‘let’s do our study. Let’s look at this town and see if we agree with it.’” 

 

In an interview after the meeting, Hauber said he is not a fan of chains, believing they siphon money out of local economies and shift it to corporations that have verticalized wealth into cities for decades, which negatively impacts rural economies. 

 

“There are some things that are different with hotel chains, as people obsess over their ability to accrue points with them, and I haven’t fully considered whether that value outweighs the values of local centric brands,” Hauber added. 

 

This all assumes Elkader could sustain a 40- to 50-room motel, as was mentioned at the meeting. 

 

Pope is confident the city could, stating, “I believe, between special events at Johnson’s Reception hall such as weddings, events at the opera house, families that come and visit, tourists and regular business needs, we could sustain a hotel. Also, Moyna is building another museum, and the railroad museum is being completed, so there are even more reasons to visit Elkader.”

 

But, during the interview, Hauber cautioned, “All investment is not good investment, and bad investors are worse than no investors.” 

 

Despite Hauber’s protest, the council—by 4-1 vote—approved the resolution and paying the entire $9,500 to conduct a hotel feasibility study. 

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