Former Peoria resident and mayor Bud Grieves put pen to paper again this week and wrote to the Journal Star, this time about the Civic Center expansion and new hotel feasibility study. What I found most interesting was a passing comment toward the end of his letter:
Finally, the business community has a responsibility to pay a fair price for a quality room with good service in our town. Hotels simply cannot afford the continuous investment required to keep properties up-to-date, let alone pay their staff a living wage, if area businesses think they can pay less than $100 a night for a room. Unfortunately, that has been the case for far too long in Peoria, and it must begin to change if we expect room quality to improve.
What Grieves is referring to here is the common practice of large businesses in Peoria (e.g., Caterpillar) negotiating a “corporate rate” for hotel rooms for their clients. There’s nothing necessarily wrong with this in theory — one expects to get a better price when one buys in bulk. In this case, large employers who bring in a lot of lodging business want to buy hotel rooms in bulk, as it were, and whatever hotel has the best rate gets the business.
The problem is, what if the only rate they will accept is one so low that it doesn’t allow the hotel to make enough money to pay for capital improvements? This puts Peoria hotels in a bit of a bind. They can reject the low corporate rate and lose so much business they risk going out of business themselves, or they can accept a rate that’s enough to keep them afloat but not enough to make substantial improvements to the property, thus perpetuating a downward spiral in rates.
Is Grieves right? Are the rates demanded by the business community in Peoria unrealistically low? If so, what can be done about it? And what would the implications of this practice be for a new hotel induced to locate here by tax breaks and other incentives?
I admire Grieves for his business accumen, but he is trying to compete against price – and his guests are missing the perks from the “big chains”. Maybe an affiliation with a chain would be his best bet?
I would expect less than “big chain” rates if I had to stay at an independent. The big chains offer frequent travelers some very nice perks in the way of upgraded rooms, free breakfast (not just a donut and coffee) and generous points towards free stays for that loyalty. We have stayed, totally free, (airfare, hotel, rental car, etc.) in Hawaii 3 times in 3 years from these perks and the big chains were charging us corporate rates as low as $79 at very nice hotels in big cities to obtain those perks.
$100.00 a night is a lot of money for bulk sales in a town like Peoria. Perhaps Grieves takes too much off the top?
I don’t get it.
The hotel either agrees to the price or they don’t. If CAT negotiates a rate and no-one will sell at that price, they go up in price. If somebody can make the rate work, and sells at that price, how is that bad?
We have a buyer and a seller here. Both agree to a price. There’s no coertion or mandating. If the City was forcing a hotel to sell at $95 to CAT I could see a problem.
Maybe we should just outlaw the free market and have the government take over all pricing.
Grieves states he would welcome a new hotel if it were privately financed. He also mentions a bridge from the Pere to the Civic Center, funded entirely by the Pere. I’m with him so far.
Then he complains about how local businesses try to negotiate the low bulk rates. This is inconsistent with his previous pro-free market statements. I agree with previous posters that a bulk rate higher than $100 is steep for Peoria. What sort of mechanism does Grieves advocate to inflate these rates? Outside of collusion or government interference I can’t think of any.
Also it is Grieves’ right to live where he pleases, but it would be a good show of faith in the city for a former mayor of Peoria and member of the Mayors Circle to live in Peoria.