On Wednesday the Kyle Planning & Zoning Commission unanimously cleared the way for Comfort Suites to build a new three-story, 71 room, 47,000 sq. ft. hotel directly behind Target on 5213 Physicians Way. If you are like me, you probably think, “Meh, another hotel. Who cares?” My prevailing thought was that hotels don’t benefit the city much because their target customer is an out-of-towner.
Boy, oh boy, was I wrong.
Hotels are HUGE for the city, and this one in particular is great for Kyle. Not only did the engineers and architects go to great lengths to satisfy the Kyle Marketplace Development Standards — which forces them to build with brick and stone, not stucco — their development will also generate property tax revenue, create jobs, and incentivize other developers to open up the marketplace by building behind the wall of businesses anchored by Target and Kohls. But none of that is the point of this article. I want to point out two main ways the hotel will bolster the Kyle economy.
The Comfort Suites generates HOT revenue
Ever wonder why hotels charge 13% tax on their rooms instead of the traditional 8.25%? The answer is the Hotel Occupancy Tax (HOT), which, in Texas, is 6%. That money is given to the city and must be used exclusively to promote tourism and the hotel industry. The law, while narrow in focus, is intentionally vague in the way it asks cities to carry out the goals. The point is to give cities discretion in the administration of the fund.
For example, the city of Buda recently used HOT funds to construct monument signs welcoming travelers to their city (see image). Because Buda has several hotels, their annual HOT revenue is over $600,000.
Kyle, on the other hand, is three times as large with 1/3rd the revenue. We currently have one main hotel, the La Quinta Inn and Suites, which sits on the north side of town across from Home Depot. In 2015 it brought in roughly $208,000 of HOT funds. By my calculations (71 x 119 x 365 x .06), the new Comfort Suites will not quite double that number.
On Tuesday I spoke with Perwez Moheet, Director of Finance, about Kyle’s use of HOT funds. He kindly walked me through the budget line-by-line. The use of the funds varies from year-to-year, he explained. For 2015-16 we will use these dollars to support our Chamber of Commerce, staff a Special Events Coordinator, and fund tourism activities jointly with Buda and San Marcos, among other things. See page 19 of the budget for a full breakdown.
As for the future, my brain is spinning with the possibilities of how we can use the extra funds generated by Comfort Suites. There’s really no wrong answer, so long as we think through the options. I would love to see a monument sign on both ends of town, but honestly that seems a little underwhelming. I prefer an approach that engages people when they aren’t driving along I-35. Perhaps funding some type of quarterly Welcome to Kyle event designed to educate and connect new and prospective citizens and businesses. Just a thought.
The Comfort Suites hosts hungry people
The second reason Comfort Suites will greatly benefit Kyle is by increasing turnout to our local restaurants. The La Quinta up north doesn’t likely do that because it’s closer to Buda food than Kyle food. But Comfort Suites, on the other hand, will develop smack in the heart of our food district.
Dozens of restaurants are within walking distance of the future site. That means every day people will come out of their room hungry and find a Kyle restaurant staring at them from every direction. That’s the power of the hotel. Displaced people with hungry bellies will pour into Kyle restaurants for breakfast, lunch, and dinner — 365 days per year.
The P&Z board members expressed their enthusiasm at the meeting. In fact, it was hard for some of them to contain their excitement. Neither should you.
Keep your eyes peeled for ground to break behind the Target.