Report: Conditions favorable for motel in Morgan

Apr 20 2012 - 5:01pm

MORGAN -- Could a 60-room motel really make it in Morgan city? Chances are moderately favorable, according to a market analysis provided to the city's consultant, former Ogden Mayor Matthew Godfrey.

"There has been considerable interest by many developers for this project and I believe we will be able to find a good match. Morgan is a great community with very capable leaders who are very committed to having a hotel in their community to meet the needs of their citizens and businesses," Godfrey said in an email response to questions. "I think a hotel is important to their growth and success."

The market analysis, commissioned by the city and prepared by Free and Associates, Inc., contemplates three sites for a motel in the city: 195 N. Commercial St. behind the 7-Eleven service station; 250 N. State St., between Ace Hardware and the Weber River; and 570 E. 525 North, west of Barber Brothers Ford.

"Though all sites could support motel development," the appraisal report names the Commercial Street site as the most advantageous.

Godfrey is also using a second study conducted by a private individual in his attempts to woo a motel developer to the area.

"They both show very good returns to potential developers based on operating income projections," Godfrey said in the email.

It would take about $3.5 million to build a 60-room, limited-service lodging facility in Morgan city, or about $58,000 per 290-square foot room in construction costs. Limited-service franchise motels in this category would include Holiday Inn Express, Best Western, Motel 6, Super 8, Hampton Inn, Fairfield Inn and Hilton Garden Inn. The study also says individually owned motels would also fit the parameters.

The study contemplates a motel on a 1.21 acre site with a reception area, cable TV, high-speed Internet, business center, fitness room, conference room, guest laundry, ice machines, public restrooms, a small breakfast area and 50 parking spaces.

The development could include a pool, according to the report, although the authors do not recommend it.

Profits would be better for a developer/owner rather than for a developer who wanted to build and then sell the project. The first scenario would mean profits of $360,000 to $390,000 annually. Selling the project would mean a net loss of about $245,000 in the current market.

"A developer who has interest in building and holding the property will find this to be a very attractive opportunity based on the studies that have been performed," Godfrey said.

The nearest lodging facilities are 15 miles east in Coalville or 15 miles west in South Weber.

"There is a lack of supply for lodging in Morgan city and a motel development is feasible," according to the report. "The Morgan area appears to be an emerging market. Therefore the proposed motel will have limited competition, as long as the area warrants demand for lodging facilities."

According to the local Chamber of commerce, hunters could benefit from lodging, as could participants in Ragnar, Widowmaker Hill Climb, the county fair, and 4th of July festivities. Nearby recreation destinations such as East Canyon Reservoir, Lost Creek Reservoir, Echo Reservoir, Wolf Mountain, Powder Mountain and Snowbasin, as well as opportunities for snowmobiling, boating, rafting, fishing, and hiking could also translate into lodging demand.

"These attractions would draw large occupancies for the proposed motel during the events," according to the report. "This would help off-set lower vacancies in the off-peak season."

Based on some of this demand and studies of occupancy rates of motels in neighboring counties, the report projects a 60 to 65 percent occupancy rate year-round for motel rooms with an $80 average room rate.

"It is very positive for occupancy," City Councilwoman Shelly Betz said.

Events at neighboring Morgan High School could also result in demand for lodging. Because of current lack of lodging facilities, Morgan High doesn't host region tournaments, City Councilman Ray Little said.

According to the study, the largest amount of Morgan motel lodgers would "come from leisure destination or transient travelers" rather than business or group travelers.

A sagging economy could be dragging projections down slightly.

"People are a little cautious with the economy," Mayor Jim Egbert said.

"An upswing and other market factors could change the results of this analysis," the report said. "Although the county currently suffers from the national economic downturn, all factors necessary for a long-term strong economy are in place including an abundance of natural resources, high education level and productivity of the population, a good diversifications of employment, and a high quality of life."

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