In our opinion: A subsidized hotel?

Published: Wednesday, Aug. 31 2011 12:00 a.m. MDT

Scott Beck, right, with the Salt Lake Convention and Visitors Bureau, talks about the City Creek construction with Michael Steele, Republican National Committee chairman, and Holly Hughes, site selection committee chairwoman, as members of the Republican National Committee site selection team take in the view of downtown from the Zions Bank Building in Salt Lake City, Utah Tuesday, April 6, 2010. T.J. Kirkpatrick / Deseret News

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Nearly two decades have passed since the first time the Salt Lake Convention and Visitors Bureau made a serious push for a taxpayer subsidized convention center hotel in downtown Salt Lake City. That effort lost steam after Salt Lake County commissioned a study by Economics Research Associates, which concluded a hotel was needed but that the private market, not taxpayers, should build it.

Local governments may need to participate to some small degree, perhaps by condemning property at a desirable location near the convention center, the report said. It also lent some valuable perspective to the local market, concluding that hotel rooms in the city were artificially inexpensive because of the number of small, non-convention hotels and because some hotels had contracts with major airlines. A large convention-related facility could charge much more than the local average, but it likely would eat into the profits of some existing hotels.

That 16-year-old report ought to at least be a starting point for the discussion as local officials again debate the need for a large hotel. It is true that, despite the passage of all that time, the private sector has not stepped up to fill the need. But it also is true that political and economic realities today make it less likely than ever that politicians would agree to get taxpayers involved.

We appreciate the skepticism expressed so far by those leaders. The Salt Lake County Council voted recently to begin the process of hiring another consultant to study the issue, but both county and city politicians of both major parties have been saying all the right things. Chief among these is County Mayor Peter Corroon, a Democrat who famously opposed county participation in the construction of Rio Tinto Stadium, home to Real Salt Lake of Major League Soccer. He stood firm on that issue until so-called conservatives in the Legislature finally ran him over, taking a cut of the county's hotel taxes and giving it to the stadium.

But Corroon was right on that issue, and he is right today when he says the hotel should be privately financed but that the county could participate by building parking or by adding meeting space that the county manages and controls. This sort of limited arrangement makes sense. It involves taxpayers only in building something they could benefit from, and it would provide a nice incentive that might attract a major hotel chain.

It would be easy to dismiss concerns from convention center officials that the county is losing convention business because of a lack of a major hotel, but we don't. Some medium-to-large conventions do indeed bypass Salt Lake City because it lacks such a hotel, which would allow delegates to stay in one place. Convention delegates do provide a boost to the local economy. The University of Utah Bureau of Economic and Business Research puts the figure on average at $923 worth of spending per delegate over a three-day stay.

Governments, however, must be careful when deciding to subsidize one particular business in a competitive market. They must define a clear public benefit, weighed against the cost of whatever subsidy is considered. That is especially true in a struggling economy, where every dollar removed from the private sector is keenly felt.

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