Kansas City is in the middle of a hotel boom — can it last?
It’s not just your imagination. Kansas City is in the middle of a hotel boom. The number of hotels calling the metro area home is set to skyrocket by about 20 percent in a four year period, from 288 in January 2017 to 326 by the end of 2021.
“So few destinations have been as fortunate as ours,” says Jason Fulvi, president and CEO of Visit KC. “The energy, vibe and momentum of our city are growing — and so, too, is interest from our customers.”
Although Kansas City is a great place to visit, it’s not often competing with Vegas or Miami. How long can the city sustain this kind of growth, and what happens if demand slows?
Jan Freitag, a staff data expert for market research company STR who analyzes the hotel industry, says KC’s hotel boom is part of a national trend. Still, Kansas City’s room growth is outpacing the national average, with a 3.4 percent growth in the number of rooms per year, well above the national average of 2 percent.
“Kansas City is an attractive market for hoteliers because the occupancy rate is comparatively stable,” Freitag says. However, he can foresee problems on the horizon. The city’s average room rate is not increasing as fast as inflation, and labor costs are also creeping up.
“If you’re a traveler coming to Kansas City, it’s great because you’re paying only as much as you did a year ago,” Freitag says. “If you’re a developer or operator in Kansas City, it’s a problem. Your costs are increasing at the rate of inflation or even more.”
While the United States inflation rate teeters around 1.5 percent, the increase in Kansas City’s average hotel room rate sits at 0.8 percent.
Labor costs are increasing, and Freitag says U.S. hotels are already having a hard time filling entry level positions. “The way to fill those positions is to make them more attractive by increasing wages,” he says. “If you’re growing your wages at the national level of 4.3 percent but increasing room rates at only 0.8 percent, something has to give. That something is very likely profitability.”
It’s not just something Kansas City is struggling with, either. Freitag says the whole country is on the same upward plane but that the end result is unclear. Still, he doesn’t expect the industry to stop building new hotels.
“Developers do one thing: They develop,” he says.
Kansas City’s New Star
If you’ve driven down Wyandotte Street recently, you’re sure to have seen the sleek edifice of what will be Kansas City’s only five-star hotel. Loews Hotel is set to open in spring 2020 with 800 rooms, 47 of which will be suites, all with floor-to-ceiling windows. Among the posh amenities are a 6,000 square-foot outdoor terrace overlooking the Kauffman Center for the Performing Arts.
Incoming Downtown Hotels
Canopy by Hilton Kansas City Downtown
110 rooms, open 2020
Embassy Suites Downtown
321 rooms, open 2020
Loews Kansas City Hotel
800 rooms, open 2020
Platform Ventures/Two Roads Project (name to be determined)
144 rooms, open 2020
153 rooms, open 2020
143 rooms, open 2021
*Source: Kansas City Hotel & Lodging Association