Study: Arrowhead Hotel Would be 'Questionable' Venture

A market study on the potential profitability of a hotel at Arrowhead Golf Club found the additional revenue to the park district would be marginal, and would be considered a “questionable venture” by experienced investors.

Despite the results of the study, parks executive director Mike Benard told the board of commissioners Wednesday he knows of three developers interested in the property.

The board directed Benard to present the report to the developers to gauge their interest for the project and to verify a staff report with a third-party consultant regarding the revenue a hotel would generate at Arrowhead.

The Wheaton Park District earlier this month hired a consultant to conduct a study of the area to determine whether leasing land at Arrowhead to a hotel chain would benefit the park district.

According to the report, while the hotel would draw significant weekend business, the weeknights would not see high occupancy. Based on an estimated $11.5-million development of a 100-room hotel, developers would see a 7.6 percent return on equity if the hotel was at an average of 65 percent occupancy.

While the hotel would draw significant weekend business, the weeknight potential is marginal and the long-term ROI would not suffice, according to the report.

Kim VanderSchaaf, who was opposed to the idea when staff introduced it in July 2011, said the study summed up her opinions “quite nicely.”

“I think this is risky for the district. I think we’ve spent too much money as it is and I don’t support spending any more money or any more staff time on this,” she said.

Board president John Kelly agreed.

Park district staff also conducted an internal report, estimating a hotel at Arrowhead could bring in about $200,000 in additional revenue each year.

Commissioner Phil Luetkehans said based on the numbers in the report, he wouldn’t support moving forward with the project. However, he said he is interested to know what investors think of the potential of a hotel at Arrowhead.

“I’m not willing to make the decision if we’re going to make $50,000 a year—(it’s not worth it). But if we’re making $300,000 to $400,000 a year, then maybe,” he said.

Commissioners Luetkehans, Terry Mee, Ray Morrill, Mark Schobel and Steve Fieweger said they are still interested in hearing how developers respond to the report and what third party consultants find on the revenue Arrowhead could generate.

Staff will talk with developers and have an answer regarding revenue projections for the board at the Nov. 14 meeting.  

Related:

• Should the Park District Bring a Hotel to Arrowhead Golf Club?
• Park District Exploring Idea for Hotel at Arrowhead
• Park District Commits to Bring Hotel to Arrowhead

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