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MAR 10 - MAR 17, 2015

Price Doesn't Sound Right

March 10, 2015

The DoubleTree by Hilton will cost $139,000 per room.

What makes the Hamister deal a little curious is the amount of money Hamister says his company will spend to build his Hyatt Place hotel.

Empire State Development's subsidies are based on the claimed project construction costs. For every $9 a developer claims to spend, Empire State will give him $1 of subsidies taken from state taxpayers.

The higher the price, the more the subsidy.

Exclusive of the $100,000 Hamister will pay for the land, Hamister claims his 128 room Hyatt Place will cost $35,607,509 to build.

That comes to $278,183 per room .

This flies in the face of published industry standards.

"Upscale," or "select service hotels" - like Hyatt Place - as industry reports consistently show - normally cost half or less than what Hamister claims he will spend.

A seven star, top of the line luxury hotel is being planned by the Seneca Nation and sources tell the Reporter the estimated costs are not more than $300,000 per room - including its gorgeous appointments, quality materials and luxurious and plentiful amenities.

A smattering of comparisons are easily available and demonstrate that no one builds a Hyatt Place for $278, 964 per room.

Hotel builder, Greg Hnedak says he delivers hotels comparable or better than Hyatt Place for $110,000 to $130,000 per room key.

Wright Hotel Development Inc., a hotel construction general contractor, builds economy franchise hotels - with the standard amenities generally found in those franchises- at the following prices per room key:

• Best Western Inns - Standard $53,000, Plus $58,000
• Comfort Inns - $55,000
• Hampton Inns - $62,000
• Holiday Inn Express - $58,000
• La Quinta Inns - $56,000
• Quality Inns - $50,000
• Sleep Inns - $49,000

Cambria Suites and InterContinental Hotels Group's Hotel Indigo cost approximately $95,000 to $115,000 per room key, excluding land and soft costs, according to industry reports.

According to Sleep Inn's website, construction costs are $42,000-$71,000 per room key.

Sheraton Four Points by Sheraton Georgia International Convention Center cost $23,686,000 or $118,430 per room key.

On their development brochure on, Hilton estimates construction costs for developers of an Embassy Suite are $105,000–$115,000 per key. Embassy Suite is a full service or "upper upscale" hotel and certainly superior to a Hyatt Place.

How can Hamister expect reasonable people to believe a Hyatt Place will cost more than twice the price - at $278,183 per room - than what a competent developer can build an Embassy Suites for?

According to a report by Daniell Development of Atlanta, GA., nationwide, the average upscale hotel, like a Hyatt Place, costs $125,000 per room key to build.


Embassy Suites, Hilton says, cost $125,000 per room key to build.


Over the years, since the Hamister project was first proposed, the price Hamister says he will spend on his project has gone up -- from $22.4 million in Feb. 2012, to $25.3 million in July 2013, to $35.7 million in Nov. 2014. As the price keep growing, the building he proposes keeps getting smaller, and offering less. Still, as the price goes up, Empire State/ USA Niagara increase the subsidies, going from $2.75 million in July 2013 to $3.85 million in Nov. 2014.

Just to be clear - we are making these comparisons comparing apples to apples. The costs per room key for both Hamister and the comparison examples are without the cost of land - but with all costs of building, preparing the site, soft costs- such as engineering, architectural, the cost of furnishings, a banquet room, retail stores, a pool, a gym.

These are standard amenities for upscale hotels. What Hamister is offering is by way of retail or a banquet room or pool is not unusual in that category of hotel.

Consider, the $27 million DoubleTree by Hilton, located at 401 Buffalo Avenue in downtown Niagara Falls, also an upscale hotel, will have 194 rooms when complete. The cost per key is $139,175 per room (half of Hamister's $278,906 per room key price.)

Yet the DoubleTree project, now under construction, is equal to, if not superior to Hamister's proposed Hyatt Place.

The DoubleTree project includes the demolition of the two-story section of the former Fallside Hotel, renovating the four-story section, and building a brand new nine story tower overlooking the Niagara River. It will have 16,000 square feet of banquet facilities (compared to 5,000 for Hamister), a 550 person ballroom; an indoor pool; a gym; and a restaurant with an outdoor patio area facing the Niagara River - done for half the price per room of Hamister.

Unlike Hamister, who will get the land nearly free from the city - the developer of the DoubleTree, Faisal Merani, had to pay for land himself.

Then there is the Wingate by Wyndham. Considered by some as a midscale hotel, it nevertheless competes in the market with "upscale" chains like Hyatt Place.

Gov. Cuomo announced the construction of the $10.2 million, 110 room, Wingate by Wyndham project in Feb. 2014. Located at 333 Rainbow Blvd - just a stone's throw from the proposed Hamister hotel at 310 Rainbow, Wingate by Wyndham's cost is $92,727 per room - about 1/3 the claimed cost of Hamister's Hyatt Place.

As for amenities, the Wingate is not dissimilar to Hamister's hotel. The Wingate was designed with 4,000 square feet of retail space, an indoor pool, meeting space, a fitness center, and retail space for full service dining.

If this still is not enough to persuade you, consider the hotel industry's most respected guide. HVS - Global Hospitality Services, the hotel consulting firm that USA Niagara hired in 2010, to analyze Niagara Falls' hotel need, publishes Hotel Development Cost Surveys, which minutely studies and estimates the cost of developing any brand of hotel with any combination of amenities one can imagine.

In HVS's 2013-2014 survey ( the company wrote, "As would be expected, new hotel construction is concentrated in the midscale through upscale segments. These STR Chain Scales represent select service and extended-stay brands, including such property types as Courtyard by Marriott, Staybridge Suites, Hampton Inns, and Hyatt Place. These properties are characterized by lower construction costs, lower labor costs and higher profit margins than those of full-service hotels."

According to HVS, average costs for a Hyatt Place, factoring it above a midscale, about comparable, or slightly more than extended stay hotels, but less than full service hotels, construction will cost around $126,400 per room key.

In fact, HVS gives a high and low end of costs. A Hyatt Place ranges from a very low of $74,500 per key to a high of $155,000 per room key to build.

Full service, or "upper upscale" hotels, a higher category than Hyatt Place, cost, according to HVS, with building, site improvements, furnishings, and amenities superior to Hamister's plans, an average of $197,000 per room key - $80,000 less per room than Hamister is claiming his Hyatt Place will cost to build.

Hyatt itself claims ( that Hyatt Place hotels are comparatively inexpensive to build.

"Hundreds of hours of research with developers and consumers helped create an exciting hotel brand with a cost-per-key that is competitive with other major brands in the upscale select-service category."

David Sangree, of Hotel & Leisure Advisors, a hospitality consulting business based in Lakewood, agrees. "(Hyatt Place is) a nice, upscale hotel, but not upper-upscale, so it's not super expensive to build," he said. "It's a popular brand because it bridges people who want something really nice and the middle scale."

It does not seem possible that Hamister - a shrewd businessman - will spend double the industry average - which is not more than $155,0000 per room key.
The true cost to build the Hamister Hyatt Place, at standard prices for the plans he has presented, is closer to $16 million rather than $35 million.

The $278,181 price per room key is so far out of proportion it adds a layer of mystery around other oddities of this arguably misguided and contorted deal.



Somehow the proposed Hyatt Place will cost, Hamister says, $278,181 per room key to build - more than double what Embassy Suites or DoubleTree by Hilton cost to build.






Our Report on the Proposed Hamister Hotel Through a Series of Connected but Separate Stories
Hamister Seeks Tax Discounts, Grants, Discounted Real Estate -- Totaling $9.4 Million
Job Promises, Job Delivery - Vast Errors By Expert State Officials
Hamister to Build Lower Quality, Lower Density Than RFP Sought
Price Doesn't Sound Right
How Was Hamister Selected?
Financing in Question?
Hamister Hotel History - A Shrinking Deal With Escalating Handouts
A Key Property, if Built as a Hyatt Place, Will Be Underdeveloped
The City Hall Good Life
Former Lockport Youth Director At Center of Credit Card Investigation Files Complaint with State
Council Unanimously Approves Hyde Park Pavilion Bond Resolution
Why I Voted for Ice Pavilion Renovation - But Paid For With Casino Cash
The Best Community to Live, Work, and Raise a Family Ortt Reaches Out To Reporter Readers
Niagara Falls Getting Hamister Hotel, Not Nik Wallenda
Only in North Tonawanda: Questions for Common Council
Sound Off on Steroids? No Sweeney, it's Not All The Republicans Fault
Mayoral Candidate Szwedo Talks His Talk with Sense of Humor
Native American Marijuana Production A Bad Bet for Niagara County Taxpayers
Findings Warn About Continuing CMO Vacancy at Erie County Correctional Facilities.
Casino Cash - Gone with the Wind
Paladino Carrying Fight to Minority Board Members
Military-Strength Anti-Bleeding Product Coming to Stores
Skrlin Hammers Home a Homely Masterwork
The Great One Scores Again: Skrlin Deftly Weave a Monster Story
Letters to the Editor
City Hall and Dog Park Jokes

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